Sesame Workshop, which produces "Sesame Street," said Monday Stephens, 23, producers in June he had a sexual relationship with Clash, 53, that began when he was 16.
Clash acknowledged he had a sexual relationship with Stephens but said Stephens was an adult when it began. Stephens backtracked on his claim Tuesday, saying the relationship was adult and consensual.
A settlement was struck between the two parties hours before Stephens' recant, in which Clash agreed to pay him $125,000, a source, whose name was not reported, told TMZ.
Though Stephens signed the agreement, he still insists the relationship began when he was still a minor and was pressured into signing the paperwork, TMZ reported.
The source said Stephens was crying throughout the negotiations and insisted he didn't want to sign.