I think it depends on what you did. If you did something crazy like run a DDoS C&C layer off your subdomains then it would make perfect sense for them to respond like this.
As others said every service reserves the right to do things like this, they just typically phrase differently. To quote GoDaddy:
> You acknowledge and agree that GoDaddy and registry reserve the right to deny, cancel or transfer any registration or transaction, or place any domain name(s) on lock, hold or similar status, as either deems necessary, in the unlimited and sole discretion of either GoDaddy or the registry: .. snip .. (ii) to protect the integrity and stability of, and correct mistakes made by, any domain name registry or registrar,
Emphasis mine and a bit snipped out since this is already long. This says if it affects their stability they can transfer your registration as they see fit. It doesn't include any protections on when you can change the domain or what they can change it to meaning blackholing you into localhost for a year is fine.
As others said every service reserves the right to do things like this, they just typically phrase differently. To quote GoDaddy:
> You acknowledge and agree that GoDaddy and registry reserve the right to deny, cancel or transfer any registration or transaction, or place any domain name(s) on lock, hold or similar status, as either deems necessary, in the unlimited and sole discretion of either GoDaddy or the registry: .. snip .. (ii) to protect the integrity and stability of, and correct mistakes made by, any domain name registry or registrar,
Emphasis mine and a bit snipped out since this is already long. This says if it affects their stability they can transfer your registration as they see fit. It doesn't include any protections on when you can change the domain or what they can change it to meaning blackholing you into localhost for a year is fine.