Hi, we're very sorry to see this happen.
Item prices were taken from prices.tf, which has worked well for the months that we have used it. This was the first case of severe item price abuse, and thus was as unexpected for us as it was for you.
Immediately after this incident occurred, we blacklisted the item from being bid on auctions, and banned the user.
Shortly after, we removed the ability to set an instant-buy value on auctions that accept items, as this was the reason the user was immediately able to trade the items after bidding the overpriced item.
We have since not found a reliable way to prevent this manipulation while still keeping all item prices automatically updated. For this reason, we have decided to remove the ability to bid items entirely, at least until a better system can be set up.
We offer auctions as a free service on our site. Other than a few optional scrap metal for promotion, we do not gain anything from facilitating these on our site.
Our pricing methods have always been known, and the risks that come along with this are shown each time an auction is made.
As auctions are a free service that is offered as-is, we are unable to match the item's value out of our own pocket. We feel very sorry that this happened, and hope you can recover quickly. Thank you for your understanding.