The legal argument to this is that they were doing business with people in a jurisdiction where it was illegal (i.e. certain forms of betting in the US). Because they had business transactions in this jurisdiction, they have broken the laws there and can be tried in those courts.
You are missing the point. Libya can totally trail someone for hosting any porn site under Sharia law. It is completely irrelevant what the TLD is or were the servers are hosted. The only thing that is important is that it is accessible from within Libya. If you want to protect yourself from this you need to block out all Libyan IPs. At least this is the case for many laws in many jurisdictions, I obviously don't know anything the Libyan one. However, if the site is hosted under a Libyan TLD this gives them additional power to block the site. This is a very unfortunate situation for website owners around the world, but this is the way it is.
If you are in one country, and are clearly and unambiguously doing business with someone in another country -- with written agreements, money/goods/etc. transferring -- then it's simply not a new idea that you may end up subject in some way to the laws of that other country. It also isn't a particularly scary idea.
The idea that "on the internet" is some sort of magical extra-jurisdictional space is the new and scary idea.
Still seized by DHS. Because it's illegal in the US. That means you can be put on trial in any country in the world if you break any laws, anywhere. That's what the article is getting at.
