Should we remain federated with an instance whose admins are banned. The consensus was to remain federated but keep their admins banned because that is the funniest option.

It seems a bit weird because due to the fact that they own the place they could easily just spin up more admin accounts to get around the ban, like this isn’t a real limitation for someone who owns the instance and can either create new accounts on demand or manually change their username in the Database to appear as someone else.
That’s why most of the time defederation is used in cases like this.