Even back when Libya wasn’t a chaotic warzone, I don’t think that it was a terribly popular hosting spot(gets brutally toasty during the summer, which is bad for A/C costs; and it is rather weakly connected, which makes it uncompetitive against either hosting in close proximity to major network infrastructure and user population centers, if latency is your prime concern, or locations that are out in the sticks, not too hot, and close to cheap power, if it’s mostly a cost thing); but using a .ly domain does put you at the mercy of the terms of service of a Libyan registrar.
Since your site is almost certainly hosted elsewhere, the actual site isn’t going offline; and your odds of getting extradited or something are minimal; but having your domain name nuked without notice is eminently possible. Happened to bit.ly a while back. Maybe my hatred of URL shorteners is clouding my judgement; but I found the amount of slightly-petulant surprise that Mr. Metcalfe mustered upon realizing that just because the customer service reps speak English and payment in USD is accepted; doing business in Libya still subjects your business there to local norms you may not like rather hilarious. Sort of like the vein of humor that is westerners-over-their-heads-in-Dubai.
