In short, yes they can.
But this will not have come out of the blue, and I suspect that we are not getting the full story.
For instance, one of my students were withdrawn for non-engagement: they passed everything but did not attend and rarely used Blackboard. The process to withdraw took months, and began with us first trying to contact the student via several avenues, in order to ascertain if there was a problem with which we could help. Have you been ignoring contact?
I have never seen an institution jump straight in with a withdrawal. There is a process during which there are ample opportunities to iron out issues.