Long ago, an ancient culture created a prison world (for lack of a better term); inmates were gathered, processed, and settled there for rehabilitation or life long interment based of their crime. Part of processing involved being unsexed, as part of a philosophy of rehabilitation through control and resocialization, which also removed the necessity of housing male and female criminals separately. It was also probably believed that it avoided sexual violence by removing the weapon involved. Eventually this culture died out, and their machines went dormant.
Then, something happened to restart them.
When these archaic automatons came back online, they restarted their programming; unfortunately, untold amounts of time without maintenance left the mechanisms buggy. The default in reassignment became the "opposite" end of the spectrum, rather than neutralized. However some are still processed as they were meant to be originally. Others end up all over the spectrum. Very occasionally, the reassignment program doesn't kick in at all, and the rare individual is left unchanged, to deal with the guilt and resentment.
People are collected by the system, based on the laws of a forgotten alien system, which may or may not be functioning correctly. These people are taken, processed--which means quarantine and reassignment--and then dropped on the prison world, in a post-apocalyptic settlement. Some of the infrastructure still remains, and it functions... to a degree. Other parts are completely lost.