I think some of the problematic instances have been defederated, IIRC there's a large japanese instance that was defederated long time ago due to child abuse content. But still since I've been seeing increases of hate speech and dog whistling misogyny and homophobia in some instances, I won't be surprised if CSAM stuff has been trading under our noses.

The main issue is that, with so many users nowadays and small moderation teams, especially in the larger instances, it's hard to moderate and tackle CSAM problems effectively. I really wish larger instances would limit user registrations or start splitting off into smaller manageable ones.

Also, since they are trading using certain hashtags, blocking those hashtags might not be a bad idea.