Yes and no.

As far as I can tell, the federative model is working as intended, and allows instances to moderate, administrate, and federate as their admins and/or communities wish to.

When I switched to Lemmy a while ago, there was a noticeable spike in alt-right instances and activity, but that quickly went away as everyone noticed and blocked users, then defederated with such instances.

The fediverse model isn’t perfect. No model will be. But it’s a damn sight more effective and responsive than any social media model I’ve seen elsewhere.