It is now illegal for any US exchange to accept the ETH from that address

Show me that law.

There are specific ETH addresses that are listed on the Treasury notice. Your post includes the link to that list. The ETHDev address is not among those, however.

Therefore, it is NOT illegal for any US exchange to accept the ETH from the ETHDev address at this time.

But to de-risk, platforms are rejecting deposits from an address that received from a Tornado Cash transaction, such as the ETHDev address They are not required to reject but they are doing it to avoid any issues down the road.

Plus, you can't "reject" a payment sent to your address. So what happens then to the amount received by the exchange? Frozen forever? Returned? Who knows.

What a complete shitshow.