My lost wallet was picked up by a weird person

Hi, I lost my wallet while walking and someone picked it up minutes later, as they found me on instagram and messaged me. They sent a picture asking if it was me and then said I can pick it up from them anytime. I've messaged them since quite a few times (and even tried the Instagram call function, didn't know it had that), but they have yet to get back to me. Here's the thing, there was a fraudulent charge on my card to a grocery store I don't go to, so I am now doubting this person has good intentions. I have since frozen my bank cards and my transit cards. What should I do next? There's some stuff in that wallet I can't really get replaced anymore (like my student ID from the school I graduated from) but it also has my passport card, which feels like a very big deal to be essentially stolen.

What should I do next? Can I even get this stuff back? Is there something else I need to do with the bank? Why did the person reach out to me via instagram first and not just bail, this is so weird.