China-based DJI sued the U.S. Defense Department on Friday for adding the drone maker to a list of companies allegedly working with Beijing's military, saying the designation is wrong and has caused the company significant financial harm.

DJI, the world's largest drone manufacturer that sells more than half of all U.S. commercial drones, asked a U.S. District Judge in Washington to order its removal from the Pentagon list designating it as a "Chinese military company," saying it "is neither owned nor controlled by the Chinese military."

Being placed on the list represents a warning to U.S. entities and companies about the national security risks of conducting business with them.