Are fungible web3 tokens really fungible?

From Token Economy: How the Web3 reinvents the Internet (Token Economy: How the Web3 reinvents the internet

Fungibility refers to the fact that units of money are equal. Every token of that currency must be treated equally, even if it has been used for illegal purposes by previous owners. This is to protect the rights of innocent recipients of those tokens, who might not have known of the illegal activities. Fungibility is not guaranteed if a token can be censored or blacklisted based on the behavior of previous token holders.

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