The domain was suspended by the Christmas Island Internet Administration (CIIA) following the receipt of a complaint. According to the complaint form filed with the CIIA, the site was in violation of provisions (4) and (5) of the "compliance with law" section of the CIIA's Acceptable Use Policy. The sections read as follows:
4. Communication, publication, or distribution, either directly or by way of embedded links, of images or materials where that communication, publication, or distribution would constitute a criminal offense pursuant to the laws of the Commonwealth of Australia or the Territory of Christmas Island, including but not limited to pornographic material and images or materials that are obscene or indecent or any data that is or has been intentionally constructed to be manipulated into obscene or indecent images or material, whether incorporated directly into a .CX web site utilizing a .CX Domain, or made accessible via a link on a .CX Domain.
5. Communication publication or distribution of adult or obscene content or images by way of embedded links in unsolicited email, postings to news groups, internet forums, notices to instant messaging programs, where the internet user is not explicitly made aware that by clicking on the link they would be directly exposed to adult or obscene content.
Based on provision (5), it appears that the complaint has as much to do with the practice of hiding links to the site in internet discussions, newsgroups, and the like as with the actual content of the site.
Under the policies of the CIIA, the owner of the goatse.cx domain has 60 days to respond to the complaint or the suspension of the domain will be made permanent. The official complaint filed against the owner of the domain, which includes an explanation of the complaint procedure, is available at http://www.nic.cx/complaints/goatse.cx/aup.noticeofcomplaint.pdf.
The CIIA has a forum in which this issue is being discussed. Be warned, the forum allows the posting of images directly into the forum. Needless to say, this is an invitation for abuse and the forum is not safe for work. There is also a petition up at PetitionOnline to have the domain reinstated.
Under the CIIA's policy, a domain will not be suspended unless a complaint is filed. The site is only now being taken down because previously, no one had complained about the site.