> if KYC exchanges rejected sats from LN, that would mean that they're not fungible either right?
No. I don't think whether exchanges accept it or not is relevant to its fungibility. I think when people say "Those examples of tracing monero don't count because the users sent them to KYC'd exchanges" their argument backfires: if monero was really untraceable, then you could safely send it to any KYC'd exchanges that accept it without worrying they might discover it came from an illegal source.
