Njalla just buys domains from major registrars on your behalf and owns them on your behalf. Godaddy, Tucows, etc. It was the owner of the entire .xyz space (gen.xyz) who shut your domain down. Njalla is just passing along the info. Porkbun will do the same.
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.
https://help.sav.com/hc/en-us/articles/11933048624923-Resolving-serverHold-on-Your-Domain