see linked post. I believe this would count as one of the examples given in the federation policy https://lemm.ee/post/401063 :
An instance which is knowingly spreading CSAM into the federated network
The entire model of federation is shunning. We are shunning them by defederating. We don’t have to interact with them. You don’t have to interact with them. You don’t have to interact with us, and in fact you could decide to go join the pedos and nazis and nazi pedos on their instances. You won’t, but on a technical level there is no central content moderator for all of the fediverse, only instances practicing free association and maybe cooperating to make that process easier.
But since you lack the authority to make us interact with those groups, you’re left having to choose who you’ll keep company with, and that’ll have consequences as people don’t like nazi or pedo apologists.