Idk why I immediately thought of "Notice me senpai, notice me!!" Hehe

LOL. As a martial arts instructor myself, he has no case. Martial artists accept the fact that the risk in the sport is very real. Also, since he's supposed to be the "expert" it would be hilarious if you brought up the fact that his "skills" are obvious bullshit and all he's qualified to teach is how to whine like a bitch.

knock him out so he can't call the cops.

your sensei sounds like a whiny ass bitch

Sucks that your sensei isn't Saitama.

So disappointing to hear something like this. It sounds like it could have been a great opportunity for your Sensei to teach the class how to take a punch which can often be more important than knowing how to block one

You are better off finding another dojo to learn in. If the sensei is that much of a whiny bitch then you're not learning anything about how to defend yourself. Even if the police get involved you will be just fine OP.

I would recommend finding out if he is insured. He should have liability insurance that covers him if he accidentally injures you or kills you and if he gets hurt teaching. He's probably trying to con you out of money using scare tactics. He has not leg to stand on and if he's not insured offer to sue him for injuring your hand and false advertising as being a professional. The reverse lawsuit for millions usually make idiots like this go away.

He's probably just too embarrassed to keep a student in his class who can actually punch him.

what a miss on a number of teaching opportunities.