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From what I heard a while back in regards to kbin formatting in profiles, Lemmy simply does not apply it from any outside instances.
I mean, could be nice to have this implemented in the future.
It’s not a lack of implementation, it’s a deliberate design decision.
Mastodon sends out data in HTML. Lemmy displays it as markdown.
What you’re seeing there is Lemmy converting the HTML to markdown and then displaying it incorrectly.