Yes, of course it has Neo-Nazis, because it has hundreds of millions of people and essentially every niche community has representation there. The doesn't mean it's remotely accurate to say that Instagram is "only Nazis and pedos".

The most followed user is Kim Kardashian, if I remember right, and she's targeting the most normie women possible. Nazis and pedos aren't exactly good for advertising.

This isn't to say that Instagram doesn't have moderation issues, but that isn't contradictory to the fact that Instagram is not solely composed of those kinds of users.