Penn State received reports saying the fraternity hosted a social that depicted a large gathering without masks or social distancing.
Penn State may take disciplinary action against frats and sororities that host socials and gatherings this fall.
Currently, there's no timetable for when restrictions might be lifted.
The chapter originally claimed Penn State violated its federal rights to due process and engaged in conspiracy and fraud. The lawsuit sought unspecified damages.
"We do not stand for racism and discrimination, and it is our goal to combat it every day. All funds will be donated to the George Floyd memorial fund to help his family and loved ones in any way we can."
The suspension comes in response to an unregistered social held on January 30 that "potentially endangered students" and involved drug and alcohol violations.