PANews reported on April 30 that according to Cointelegraph, Terraform Labs' attorney filed a motion opposing the U.S. Securities and Exchange Commission's (SEC) request for $5.3 billion in recovery and civil penalties against Terraform Labs and its co-founder Do Kwon. In a document filed with the U.S. District Court for the Southern District of New York on April 26, Terraform's legal team suggested that the court impose a civil penalty of up to $1 million. Terraform claimed that the court "should not grant any injunctive relief or recovery" because the funds actually had to be obtained from the Luna Foundation Guard (LFG), which is a "non-party" to the civil case. Terraform also stated that a $1 million civil penalty is "much more appropriate" than the SEC's multi-billion dollar fine.

On April 5, a New York jury found Terraform and Do Kwon guilty of defrauding investors in the sales statements of TerraUSD (UST), Luna, and wLUNA. The SEC subsequently filed a motion to recover $5.3 billion in ill-gotten gains and civil penalties. In addition, the SEC proposed to prohibit Do Kwon from serving as an officer or director of a securities issuing company and provide detailed information about his accounts and assets.