I wouldn't panic yet as a .ly domain owner:

"While letters ‘vb’ are quite generic and bear no offensive meaning in themselves, they’re being used as a domain name for an openly admitted ‘adult friendly URL shortener’. Now, had your domain merely been a URL shortener for general uses similar to bit.ly (as you claim) there would have been no problem with it. It is when you promote your site being solely for adult uses, or even state that you are ‘adult friendly’ to promote it that we as a Libyan Registry have an issue."

That said, the value of .ly domains definitely just dropped.