Apple Device Not Eligible for Trade In - Device appears in a national database for missing property

I bought an Apple Watch in April 2022 directly from Apple. It broke within 2 months and I used Apple Care to get a replacement, which then broke within a week. Spoke to Apple Care who agreed to replace the replacement Apple Watch with a new Apple Watch.

Fast forward 2.5 years and I go online to Apple.com to buy a new Apple Watch, input my old Apple Watch information, my trade in gets accepted, I complete the purchase and send in my trade in. My trade in then gets cancelled and sent back to me. After a loooooooong time and numerous phone calls to Apple Support and a trip to Apple Store, I finally find out that "the serial number of this device appears in a national database for missing property and cannot be accepted for trade in. The woman at Apple Store tells me that I have to reach out to my carrier or email some check-mend email. The Apple Watch is not missing or stolen, I LITERALLY bought from freaking Apple. The Apple Store even said that everything looks good on their side and she can she the record of the trade ins, Apple Care etc. This is so crazy! How do I get my freaking trade in value? No one at Apple can help me, apparently, even though the watch is from them....