“He is no longer suspected of any crime,” Sweden's national prosecutor's office said in a press release.
The country's Säpo security police on Wednesday arrested Moder Mothanna Magid in absentia, on suspicion of planning a terror attack on Stockholm. At the same time, they raised the terror threat level to “high” for the first time in the country's history.
On Thursday evening, when Magid was seized in a raid on the asylum accommodation where he had been staying in Boliden, northern Sweden, Prime Minister Stefan Löfven commended the security services for "the speed with which the suspect has been found and arrested”.
On Sunday, Swedish commentators were lambasting Säpo for what looks likely to go down as one of the most embarrassing false alarms in its history.
"A record in incompetence? National alert, press conferences, leaked picture and name. And everything was false!" tweeted Staffan Sonning, Swedish radio's chief economics correspondent.
Magid's father Muthanna Majeed, however, said he was overjoyed that his son had been released.
"We have not slept or eaten for three days, but now we are very happy. Thank God!" he said. "This shows that there is justice and democracy in Sweden."
Doubts were already spreading in the Sweden soon after Magid's arrest, after his Facebook profile showed that he had made no efforts whatsoever to hide either his whereabouts or his identity, despite a highly public national manhunt which saw his photograph published in Sweden's national newspapers.
Deputy chief prosecutor Hans Ihrman, who is leading the investigation, rejected accusations that Säpo had panicked following last week's terror attacks in Paris and Mali.
"I can only underline that the initial information and the evidence which pointed against him, was sufficiently severe that, in any criminal investigation he would be in focus," he said. "It was very concrete information and he was pointed out very clearly. I assume we would have done this with or without what happened in Paris."
He said that since Magid's arrest, analysis of his computer and mobile telephone, together with his own explanation of the incriminating evidence, had convinced police of his innocence.
It has, however, not been enough for them to put their investigation to rest.
"There are several circumstances we have to investigate further," he said in his press statement. "There still remain reason to believe that preparations for a terrorist crime took place".
Säpo's press chief Sirpa Franzen also dismissed speculation that the arrest was a case of mistaken identity.
"It was not that the wrong person was arrested. There were suspicions that have been completely dismissed, but there remain other unclear circumstances that we are investigating," she told the Expressen newspaper.
Franzen argued that the present high risk of terror attacks meant all security agencies had to constantly assess whether evidence merited actions.
"You are forced to act based on an incomplete picture of the situation, and given the uncertain situation that exists right now, it is likely that Europe and Sweden too must adapt to this type of situation in future," she said. "The police and Säpo will never hesitate to act quickly and resolutely in such a situation."