@Mike2524 Why in the world would you think an altercation in your home would not be related to your listing? It absolutely is! And as a guest, I would have been scared too.
My rental is similar to yours. It is a basement studio apt with a separate private entrance. I go out of my way to ensure my guest hears nothing out of the ordinary from above—loud talking, walking heavily, etc.
Please see it from your guest’s POV and airbnb’s concern regarding the safety of guests while staying in your STR. A loud altercation could have easily escalated to something more serious.
IMHO, the guest did deserve a refund and I don’t understand why you believe the suspension is unfair. I suggest treating this entire situation as a lesson-learned.