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Further $120 is not an unreasonably price to pay for a wifi kindle in craigslist, there could be a situation where somebody got it as a gift and would rather sell it and keep the cash.
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I agree and the fact is that you may never know the actual situation. It may be a gift to someone who really didn't want it but also didn't want to hurt the feelings of a giver by returning it to Amazon. But he or she may have needed to explain the disappearance of a device, so a tale gets invented how it got stolen. And then the giver dutifully reports the device as stolen.
Or it may be stolen from a mailbox. In either case I wouldn't make this too big of an issue. If Amazon does not want it back then involving police would be spending more public money than those $120. I would learn the lesson and switch off the wireless and use it for reading .mobi e-books. And honestly would give it back when one day somebody comes to claim it as his property.