I investigated that instance and am not seeing what you claim they are doing. Any chance you just stumbled across a rogue community there that has already been banned by their own admin team? The instance and communities there are pretty adamant about not posting any content that violates US law (which is pretty strict when it comes to the kind of content you describe).
Also, why is the knee jerk reaction to defederate when banning a single community is usually all it takes to solve the problem?