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The buyer has the key now, so yes. You will have to respond to the dispute/chargeback through PayPal, though you have no way of proving the key was valid so PayPal will likely side with the buyer.
The problem is, if the seller does not have Portal 2 and tries to redeem it to see if it's been used and it has not been used, now it's tied to their account.
Key has been used, learn from your mistakes.