The plaintiffs, who hold Argentine debt amounting to 1.3 billion euros, argue their euro-denominated bonds fall under English legislation and therefore should not be swept up in Griesa's rulings.
Read MoreArgentina'sdebt fight: What it is, why it matters
Griesa has ruled the bonds should because interest payments made on them pass through New York and therefore fall under his jurisdiction.
A move to resume interest payments
On Tuesday, BNY Mellon said the lawsuit filed against it was "without merit."
"We continue to follow the current court order to hold onto the money," a spokesman for BNY Mellon told Reuters.
Argentina's Congress is due on Wednesday to discuss a law that would replace BNY Mellon as intermediary for payments on foreign law bonds with state-controlled bank Banco Nacion, as part of a new debt restructuring plan.
The central bank "has revoked BNY's authorization for representation in Argentina," Cabinet Chief Jorge Capitanich said in his daily briefing. The authorization applied specifically to two BNY Mellon officials.
If Argentina's draft legislation is enacted and executed, it would allow it to skirt Griesa's court orders and resume interest payments on an estimated $29 billion in restructured bonds.
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The debt crisis has taken a toll on Argentine assets and the peso, which sank to a record low of 14.20 per dollar on the black market on Tuesday despite the central bank's lifting interest rates in an apparent bid to ease pressure on the currency.
A central bank source, speaking on condition of anonymity, said that revoking BNY Mellon's authorization would not prevent it from transferring the frozen $539 million to bondholders if it decided to fulfill the payment.