Basically. Instance administrator is responsible for what they host, and they must follow the law of were it's host (and maybe the countries of their users, if they are European for instance).
If you are hosting something too illegal and draw attention they may block your IP, fine you or even raid the server location.
This makes me wonder: how could governments police the Fediverse? With Reddit they could just threaten the company, but what are they going to do with Lemmy? Threaten whoever hosts the instance?
I’m guessing that’s why people are recommending finding an instance that isn’t USA based.
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