It's Tmobile's website that will have the most up to date information if the phone was reported lost to them. Apple would probably get it second was it was reported to them.
To start off with, apple will tell you anything to get you off the phone..... Now with that out the way, the person who sold you the phone could just as easily removed the device from their icloud account and say its clear, then either stop making payments or report it stolen. My best guest is that they just stop paying on the account, and it take about 2 months for T-mobile actually block it. I know it sucks that you got basically robbed and left with a device that you can not used. But the only thing you can do is go to the police and file a report for fraud.
This is a very well known scam, a new one by the way.
The way it works is that scammers are selling smartphones still under contract with not just TMobile but with any carrier at high prices. To make people believe the deal is legitimate the scammers will often offer to meet customers at the TMobile store for activation. Once the activation process completes successfully the victim pays the scammer for smartphone. The scammer in return stops making payments to TMobile or any other carrier, at that point the smartphone de-activated for non payment making the smartphone pretty much useless until outstanding balance for the smartphone is paid in full.
Sorry to hear that your phone was blocked! It is unfortunate but as cesaribenitez95 and elguapo91342 mentioned, this phone was most likely not fully paid for when it was sold to you and the seller reported it lost to the insurance company. It makes me sad to tell you but unfortunately there is nothing that we can do in this situation. Your best course of action would be to attempt to contact the seller in offer up again (I know it usually keeps a history of your messages with buyers and sellers in the app) or reach out to the police to see what options are available.