Note: If one can use PayPal to purchase "sex stuff", others must logically be able to sell that same "sex stuff"; otherwise, where is the money going?
I have used PayPal to make purchases on websites that provide adult materials.
Again - every PayPal transaction has both a buyer and a seller. So, if people can buy something with PayPal, someone else is selling that thing.
If no one was allowed to sell such things via PayPal, then there would be nothing for anyone to buy, so in effect buying such things would not be possible either.
If you mean PayPal might shut down a seller's account due to violation of terms or too many chargebacks and such, but would not shut down the accounts of the people making the purchases? I imagine that's correct.