Since its servhold, you may be able to remove the offending content (for a short time, anything public-facing) and then contact reg.xyz to get it unsuspended. You’re right though that’s not very good customer service.
On a related note, it’s possible a misconfiguration allowed some of the contents or index to be shown publicly and it got caught in a search engine and was taken down in an automated DMCA sweep. I believe .xyz is an American registrar so have to respond to DMCA but could be wrong on that. I like to stay with any .TLD that archive uses… md, ph, etc.