Terraform Labs and its co-founder, Do Kwon, are disputing the penalties proposed by the U.S. Securities and Exchange Commission (SEC). They argue that a fine closer to $1 million is more reasonable than the proposed $5.3 billion. The SEC's proposal includes damages of approximately $4.7 billion and a fine of $420 million for Terraform and $100 million for Kwon. However, the defendants' lawyers believe these amounts are too high. In a recent court filing, Terraform and Kwon's legal team advocated for a much lower penalty, suggesting that Terraform Labs should be fined no more than $1 million. The SEC charged Terraform and Kwon in February 2023 due to issues with the algorithmic stablecoin Terra USD (UST), which experienced a significant value drop in May 2022, resulting in losses of over $50 billion. A jury found Terraform and Kwon liable for civil fraud, alleging they misled investors. The SEC also accused Terraform and Kwon of violating federal securities laws by engaging in fraudulent activity related to Terraform securities trading. Additionally, Judge Jed Rakoff previously supported allegations that Terraform and Kwon offered and sold unregistered securities. Following the verdict, a Terraform spokesperson stated that the company is carefully considering its options and next steps in response to the legal proceedings.