nginx proxy_pass to subdomain not working (redirects to domain)

Hi, I am having a problem setting up a proxy to SoundCloud.

On my local copy of nginx, I have a proxy set up like this:

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location /soundcloudtest/ {
     proxy_pass api.soundcloud.com;
}

So visiting http://debian:8080/soundcloudtest/ will proxy http://api.soundcloud.com/soundcloudtest/, which works fine.

When I do the exact same thing on my Webfaction account's nginx instance, it proxies http://soundcloud.com/soundcloudtest, not the api subdomain, and not only that, looking at the page's source, SoundCloud renders the site with my domain as the host, i.e:

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<form accept-charset="utf-8" action="https://mywebfactiondomain.com/session" id="login-form" method="post">

Can anyone give me a clue why this is happening?