Hey Buddha, this is exactly the way my seedling is heading. Currently the stem is 6cm tall, and seems to be stretching by the hour! I'm just waiting for it to fold over on itself likes yours unfortunately did.
I'm thinking of doing a replant and burying a few cm of the stem in the new grow pot. I'm no expert but it seems that your seedling is very delicate to be bound like that? But I guess it keeps the plant upright, as long as it's not bound too tightly.