Using a client/server architecture for Diablo 3 was intended to stop hacks and item duping.
It looks like there were an exploit in there that led to Blizzard taking down the China server for a few hours on Sunday and issuing a hot fix to the other regions.
According to some websites, the bug has been present since the 3rd of June, so people have been making money off duped items since then. Roll on the Real Money Auction House!