The admins of that instance are pretty blatantly disregarding their own rules in order to push their agenda. If that shouldn’t be grounds for defederation, I don’t know what should.

I personally don’t think staff of a community or instance choosing how they administrate posts there is a solid grounds for defederation, nor do I think defederation is a useful response.

If you find their moderation and staff intolerable (and fwiw I also think some of those bans are poorly justified), I recommend you block those communities or their instance from your account. But I don’t think blocking their users from contributing here and blocking us from contributing there is appropriate.