Nash can stop parties from trading at Nash if there are legitimate reasons for it. Use of the fiat ramps probably has the same stipulations. Nash cannot seize funds as these are non-custodial. It can only stop service.
At any rate, if anyone were involved in criminal activity, then using Nash would be one of the surest ways to get detected (such as via the KYC). If stolen crypto gets turned into fiat currency, then banks are also able to freeze those funds, so that may actually be good news for those whose funds were stolen if the guilty party seeks to use the fiat ramps.
Flash loans have highly, highly specific uses. These are so specific and limited (only relevant during the time frame of a single blockchain block) that their true use instead becomes to exploit those who know less as opposed to their originally stated purpose. New investors / speculators get dazzled by all these ‘wonderful’ new use cases and then swallow hook, line and sinker. Fractional reserve stable coins also can cause issues in their own right. Too many want to get rich too quickly. Some are smart, greedy and not so ethical and others may be greedy, quite ethical, but lack the expertise in a given area. Those without expertise are always going to get taken to the cleaners. There are many zero sum games out there and people need to be aware and careful about such ‘ventures’. Too many unfortunately still do not know themselves well enough to be able to stop themselves in their own tracks as greedy people tend to have their blinders on. There is no free lunch. All that is precisely what makes Nash so great. Ethical high tech products lead by an ethically correct team.