Unfortunately, if he were to keep it without reporting it, a misunderstanding could be the result,he'd be deemed a hacker and be banned instead of the actual hacker.He prob didn't what the pokemon to get taken away and not get the one he traded for it back..my guess anyways, but ya prob should of been reported but I can see why he did not if it was that reason.
It is more beneficial to report them instead of staying in silence.