As far as I could tell from some posts on HT and Reddit, it looks like they are dumping buyer's XPY for BTC and using BTC via Gyft's reseller API to purchase those gift cards.

Technically Vinny might not know what's happening, he's getting BTC like from any other reseller.

I think he's calling the rumor rubbish, not Paybase/Paycoin, but that works too