iCloud Storage issue

I have 2 TB iCloud storages plan. I am not able to copy files on this iCloud drive from my External HD in MacBook M3 Pro . It say that "Manage Space" even though I have more than 1 TB free space. What could be a reason for this?

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We appreciate your interest in participating in the forums! These forums are for questions about developing software and accessories for Apple platforms. Your question seems related to a consumer feature and is better suited for the Apple Support Communities

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App Store Connect Engineer
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