Well. This is going to be bad publicity for airbnb. (I will consider my options to make public aware of this)
As a host,
1) why airbnb allows such bookings?
2) If airbnb believed something should be sorted out before checkin and knew reservation would be cancelled if not, why it was not communicated to me as soon as the booking was made? (It stood for 8 days)
So airbnb clearly made me lose income.
In summary, Airbnb's approach was to allow a suspicious booking to stand until the last minute and keep host in the dark.
If the guest sorted out by last minute, airbnb get thier commision.
If the guest didn't sort out by the last minute, cancel the reservation and airbnb loses nothing but now host has lost thier potential earnings.