Technology
This is the official technology community of Lemmy.ml for all news related to creation and use of technology, and to facilitate civil, meaningful discussion around it.
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I'm almost certain that if something like this happened to any fediverse instance - that a local police enforcement would contact the admin and asked for user's data, which they are required by law to provide or they would go to jail/get a hefty fine and possibly a criminal record, they would do that too. That's also why E2E is required, to prevent such problems for instance admins - but then again, there's really nothing you can do against local law, and if it requires that you have to be able to cooperate, well... Then there's not much the admin can do, without putting himself in a real risk of prosecution, because he is breaking the law by have E2E.
That's also a good reason to be careful when selecting your home instance, and making sure that you choose one in a country that has all right laws in that regard.
Of course, that's assuming the police makes contact. I don't suppose that the admins would be searching through the DMs of people to snitch on them. And if Meta is doing that preemtively and is actively snitching on people - that's downright evil.
E2E is technically illegal for any interstate communications in the USA, since refusal to comply with a wiretap order will put you in jail for contempt, regardless of whether the medium allows for interception or not.
Single user instance locally hosted, is the only way forward
The federation API isn't using E2E either. It makes no difference if you use your mobile client to contact the mobile API or if you're hosting your own instance to use the federation API in safety regards. You should always be aware that every message / post / image you publish (even in a closed group) in the internet could be traced back to you and with enough afford be available to anybody with the right skills.
Only end to end encryption can help you there - this is the way.