Basically, in Catherine, there's a transgender female character named Erica. Even in the original Catherine, she wasn't handled the greatest as a trans character. In one ending, one of Vincent's friends, who slept with Erica prior to the ending, reacts with disgust when Erica comes close to him, shouting about how "the other guys knew you as Eric back in high school". Already pretty ****ed up.
But in the remake, Catherine: Full Body, there's a specific ending in which one of the main romance options (who is a demon by the way), goes back in time to "make things better for Vincent", the main character. And when we get back to the present, one of the ways the timeline was "made better for Vincent" is by making it so Erica never transitioned to begin with. Now, there's some divide over what the true context of the ending is. Some people are saying the explanation here is what happened. Some people are saying it was a mistranslation, and the true context of the ending is that Erica is still trans, she just hasn't transitioned yet.
Either way, **** ain't lookin' good for ATLUS. People are up in arms.