Hugging Face is the place where you go to download models you can host yourself.
Honestly... I have no idea how they expect hugging face to address this, once you're hosting the model yourself, they can't control your system prompt or scan what it's outputting or anything of the sort. It'd also be pretty impractical to scan all of these models to prevent anything, some of these models are terabytes in size, and I think just about anything that can output an image can output a "sexualized" image to some degree.
Seems like a nothingburger headline, really, a bit like saying "VLC does nothing to prevent users from watching child porn". It doesn't, but I don't know how you'd expect it to when it just serves a basic function that doesn't really have anything to do with the illegal part.
Definitely on my list of suspicions, with this article coming out so soon after Claude had to drop their prices for Fable dramatically, with models like Kimi's latest competing with it for much cheaper. Not to mention this coincides with the push to ban "Chinese models", it feels like this could be part of a broader wave to block the competitive open source models from US markets by any means available.