Much more information is needed. If you report the crime to the local police your name will eventually become known. But how else do you stop such a crime. The whole idea is to utilize something you do not want others to know. Suck it up and report the guy. The embarrassment is in your head not your pocketbook. Go get him. Easy for me to say.
While there is always the possibility that if you report the crime that your name will become known, the police and prosecutor can take steps to try to limit it (especially if the matter doesn't go to trial) but the truth is that once one person knows everyone will know. If you are really being blackmailed and/or extorted you should certainly contact the authorities. While I recognize that oftentimes privacy is an issue, you have to consider that giving into blackmail is never a good thing. There is a snowball effect that can hurt you much more.