Title is wrong: he's not settling the lawsuit... He's raising some money for charity, and raising his middle finger to the lawsuit.
It's quite a clever way to make a show of fundraising ability, and possibly scaring Funky Junk away.
He's not "settling" in the legal sense. He's settling in the sense that he's putting the dispute to bed. We'll see how it turns out for him.
I love how the community on the Internet can come together in an hour to squash complaints like this. Matthew is beloved and there is no way that we would let him fight this alone.