I am a faculty member and I have, sad to say, some experience with students in my grad program being accused of academic misconduct. I also have a family member who served on the judicial appeals board for undergrads so I have some familiarity with that too.
Only an instructor can assign a grade to a student.
Schools have a published policy on accusations of academic misconduct that includes a formal process and an appeals process.
In some cases, the dean in charge of academic misconduct will "plea bargain" with a student and faculty member: the student foregoes the right to a hearing and an appeal in exchange for not having a record of institutional action on their record and instead accepts a lower grade (usually an F) for the course. It is somewhat like agreeing to accept a misdemeanor rather than risk being convicted of a felony if you went to trial.
So I describe this as a preface to what happened here which was that the student, it seems, did go before the judicial board after the teacher accused the student of cheating. The honor board heard the case. Upon consultation with the teacher, the decision was that the teacher would give the student an F for the course. Remember, only the teacher can assign a grade. An alternative that the school can take independent of an individual instructor is to suspend or expel a student. The student appealed the decision to administer a penalty for this behavior which given that the student was appealing it seems to be a penalty for cheating. The appeals board upheld the decision of the honor board.
This does seem to be a cut and dry institutional action that must be reported as
@Goro notes while I was writing this missive. I concur that it is going to take years of exemplary behavior to make up for this transgression. We don't want cheaters in our class and we'd be foolish to admit convicted cheaters with the expectation that they won't cheat in the future. When such a student does so in the future, the question comes back at the adcom, "Why did you let that one in if you knew they had a history of this behavior?"