Krafton's Subnautica 2-centric legal battle with Unknown Worlds' former leads intensifies

The Subnautica 2 saga has taken another turn as one of the biggest game industry debacles of the year, as former Unknown Worlds leadership including CEO Ted Gill, co-founder and creative director Charlie Cleveland, and co-founder and technical director Max McGuire, have filed a lawsuit against publisher and parent company Krafton for “sabotaging” the game’s 2025 early access release to dodge a $250 million incentive.

The 58-page document was filed in the Delaware Chancery Court on July 10, 2025, and alleges that the publisher breached its 2021 acquisition agreement by not only hindering Subnautica 2’s development but also firing the trio without just cause. The document states:

“In short, Krafton flagrantly breached both the letter and the spirit of the promises at the very core of its agreement to purchase Unknown Worlds.” According to the former leadership’s narrative, Krafton breached its end of the contract to leave creative control with the founders and not terminate them without cause.

The document further states:

“It promised to leave creative and operational control in the hands of the Founders. Promise Broken. It promised to consult the Founders before taking any action that could harm the earnout. Promise broken. It promised not to take any action with the primary business purpose of frustrating the earnout. Promise broken. And it promised not to terminate the Founders without Cause. Promise Broken.”

“Why? Because Krafton knew that allowing the Founders to launch Subnautica 2 as planned would generate enormous commercial success and require Krafton to pay the $250 million earnout. By firing the Founders and delaying the launch, Krafton can capture (what’s left of) the game’s commercial success without paying the Unknown Worlds team a penny of the earnout.”

The conflict first garnered controversy when Krafton announced that the former leadership would be replaced by Striking Distance Studios' former CEO, Steve Paoutsis, on July 2, 2025, stating the need for “renewed energy and momentum”. Days later, Krafton announced Subnautica 2's delay, which is claimed to be a move orchestrated to avoid the $250 million bonus payout.

The lawsuit seeks the full $250 million promised bonus, damages, alongside reinstatement of the former leadership. The gaming community and fans have had polarized reactions, with some calling for a boycott, accusing Krafton of “ripping the game from its creators in the name of money.”