It's probably like this: When you want to have a new E-Mail account somewhere, you sometimes are asked to choose an address. Depending on the address it can happen that the program tells you that the address is already occupied. Twitter accounts have the format: @something. Now Israel Meléndez seemed to hold the @Israel account, but he didn't use it because when some people read "Israel", this triggers in their brains a desire to unload some insults. Now Israel doesn't mind or is used to such responses and might find the account name quite good for its own purposes or just wants to make sure this name isn't used for activities it doesn't agree with. And so, medinat yisrael asked Meléndez, who used @Israel to communicate messages related to his porno-site, to change the name of his account so that the state of Israel itself could occupy this name on its part. This doesn't mean that the state of Israel wants to set up a state run pornography business (although the "Prime Minister Netanyahu logging on" might suggest it...) That's how I understood the text.
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