I got the impression Demand Progress was referring in that sentence to MIT as the "alleged victim", which seems slightly disingenuous to me. It also seems plausible that MIT would behave in the manner described. However I have not yet seen a statement from MIT that would corroborate this, either.

And even if it were true, the "alleged victims" don't get to decide whether the government prosecutes. The only cases where the victim can force the prosecution to abandon their case are those crimes such as spousal abuse where the only hard evidence is the testimony of the victim themselves. In other cases, the government can get all of the evidence it needs through subpoena.

That sentence may have been updated to clarify: “It’s even more strange because JSTOR has settled any claims against Aaron, explained they’ve suffered no loss or damage, and asked the government not to prosecute,” Segal added.

Yeah, I haven't seen anything that backs up Demand Progress's position.