The Upwork should have a Insurance for these kinds of frauds. So I would definitely check this up.

As Upwork is a big company, they are definitely covered up with Insurances. So tell them that this is a fraud that is not caused by you. And the client protection insurance should cover it.

I do not believe ever that they are a big company and do not have insurance for fraud.

Next I see that you are based on Switzerland, I don`t know if you have but Civil Responsible Insurance, should go under this.