Wingman - relax, it's a trick.
Hope that this isn't classed as revealing but he has a slot cut inside the side of his mouth that he secretly slips the coin into. He can then manipulate the coin around his body, just under the skin. That's how you see it sliding down the inside of his arm and his saliva adds some lubrication so that it slips and slides around nice and easily.
There is a little prep before hand as he freezes his skin on his arm with a cube of ice, just to slow the flow of blood so that when he cuts into his arm, only a small amount of blood is lost.
Don't try it at home though!

Member of the Magic Circle & The 2009 British Isles Close-Up Magician of the Year
It's not really an optical illusion - it just looks like one!