davywavy | Moral quandary?

No correct answers, I'm just curious as to how you lot think.

Whilst out walking one day, I came to a bridge that lead to the land of the goblins. I crossed the bridge, and found on the other side a gallows, a cage with a man in it, and three goblins dressed as judges.
"Halt!" cried one of the goblins. "We judge those who enter this land. If you tell us truthfully why you have come here, you may enter freely and unharmed. If you lie, then we will hang you!"
I told the Goblins I had visited from curiousity, and they accepted the truth and let me into the kingdom.
Then I spoke to them about the man in the cage.
"He is a challenging case." They said. "He came to us and told us that he had come here for us to hang him. If he speaks the truth, the law says we must let him go unharmed, and if he lies we must hang him. He said we would hang him, but we cannot, because if we do, he will have been telling the truth, and we should let him go free. If we let him go, he would have been lying, and so we should have hung him instead. We are keeping him in the cage until we decide what to do. Can you make any suggestions?"

I thought for a while, and made a suggestion, and told the Goblins my reasoning. The agreed with me, and the justice was served.

What would you suggest the goblins do with their prisoner, and what is your reasoning for your suggestion?