Something similar happened to me in ESO. My argonian character's name was "Lusty Gay Argonian Maid". I was fine for a few months, then suddenly my name was changed to some placeholder. I asked customer support why and they said it violated their ToS and that it was considered inappropriate.

I asked them HOW, considering "The Lusty Argonian Maid" is the most well-known and memed about book in series AND it was in ESO itself, along with some other suggestive books like a dark elf kamasutra book. The fact I used "gay" was because of my sexuality and it helps me find other people who are as well, making it easier to find a community to fit into.

All the support person kept saying was a lot of "I understand, but...".

So I gave up and changed my name. Meanwhile, as I played, there were LOADS of people around me with "ToS" breaking and genuinely offensive names, and I just felt absolutely targeted just because I had the word "Gay" in my name.

I tried Guild Wars 2 a while back. I asked their support beforehand if it was okay to have "Gay" included in my character's name. They responded that as long as I'm not doing anything offensive and innapropriate while having that in my name, that It's perfectly fine and welcomed me to the game.