The simple answer is probably not. Some domain registrars and commentators are conflating the issues of forgetting to renewr a domain and it being lost to domain-squatters that route the traffic to unsavoury sites, and the chances of someone buying a likely trademarked .XXX domain with no traffic – these are very different situations.
Companies forgetting to renew their domain (.com, .co.uk, or any other) and that domain being snapped up by a 3rd party which redirects that traffic to make money is a very real issue. Yes domain registrars should keep registrants informed that their domain is up for renewal, but companies and domain owners should also keep track of these dates themselves. If you forget to renew the domain, and the domain expires (normally about three months after the registration should have been renewed), then that domain goes back on the open market.
Enterprising individuals are continually on the lookout for such expired domains that are still getting traffic, and they snap up these domains as soon as they become available – then putting them to use in generating revenue by redirecting that traffic elsewhere. Sometimes the traffic will be routed to adult material, sometimes not – it depends on how the new domain owner plans on monetising it. The domain was bought on the open market for the traffic it was receiving – and that traffic can be valuable.
In these cases of missed renewal the original domain will struggle to prove any claim to the domain unless they have some form of trademark, and people looking for the original website will be confused by not getting the content they expect. The National Asbestos Training and Accreditation Scheme (NATAS) is one such organisation that has recently experienced this as they forgot to renew their .com domain – and have since moved to a .co.uk as they could not reclaim the domain.
The value of the traffic of an expired domain is in direct contrast with the value of a brand new .XXX domain. People looking for a business are simply not going to type in “www.business-name.xxx” and expect to find the website for that business. No, they may try .com or .co.uk or just type the business name into Google. None of these methods would bring up the site of a domain-squatter that owned the business-name.xxx domain. Google’s algorithms are clever enough to know that the domain with all the links pointing to it is the one people are after, not just the one with a similar domain. With no traffic, the business-name.xxx domain has very little value at all to a domain-squatter, and so would likely not be registered. Indeed, to someone trying to build an adult site – they would be better off buying a unique-word.xxx domain for their site so that it would list higher in the Google rankings.
Could it be embarrassing if someone typed in your-business.xxx and found themselves looking at x-rated-material on the very rare chance your-business.xxx was registered by a domain-squatter? Yes. But you’d have to ask yourself – Why did someone type in your-business.xxx if they weren’t looking for adult material? Because they wouldn’t have found their way to that site any other way.