I'm pretty sure he'd argue that this fits the definition of general USB (and he has the right to stop play and restart with an IFK if he's cautioning for that reason), but I think he's caused the problem here by not acting quicker.
As soon as there are two balls in play near each other, he should stop play and restart with a drop ball - I think he'd even be justified in ordering the throw in the be retaken as the second ball is maybe already in play at that point? Seems harsh to book a player for that action when it's clearly a ludicrous situation and you've been slow in dealing with it.