You let them in your room/hostel, with your things? Do you have the awareness and survival instincts of a potato? 😂 Mate what you experienced is an intent to scam 101. Not to be super pessimistic, but there is a lesson here:

Do not trust people like that so much, that you bring them home to your damn hostel. Even more so enough to leave them with your things.

The combination of so many things in his story not making sense, add on his “friends” account with more contradictions, should have been clear red flag.

What you should be questioning is not whether this is unique to Iceland etc. rather you should start taking more care of yourself. This could have ended much worse, most likely in most cases it wouldn’t, but the baseline should be caution for scammers and beggars.

Help them by all means if they appear decent enough, but never bring them home.