The inventor of the first MUD was asked to write a sex MUD during the dot com boom. The Escapist has his account of what they chose to do and what eventually happened to the ill fated project.

Desperate account of game creation, so probably NSFW, more after the jump …

Oh, we were given a more concrete deadline, too: one year. We were also
given a budget: nothing. … Hey, I know this one - we write a text
game!

This did make horrible sense. … All we required was some fiendish
mind-control system to persuade people to play a text game when they
really wanted to play EverQuest.

So, that would be sex, then. … You could say, “These specific people
are allowed to make love to me,” but not, “Anyone in this room is
allowed to make love to anyone else in this room.” To this end, we
implemented a fairly neat permissions system whereby every character had
an attitude toward every other character. The default was stranger,
which meant all physical contact was forbidden.

Link

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