Subnautica 2 developer Unknown Worlds sues founders as Krafton lawsuit saga continues

The developers behind Subnautica, Unknown Worlds Entertainment, have filed a lawsuit against its co-founders, Charlie Cleveland, former CEO Ted Gill, and Max McGuire. Unknown Worlds alleges that the founders abandoned their leadership roles, misappropriating confidential company data, and pushed for a premature release of Subnautica 2 for a hefty payout.

The 74-page lawsuit was filed on August 15, 2025, in the Delaware Court of Chancery, presenting executive disengagement that allegedly hurt Subnautica 2’s development and threatened the series’ integrity.

This shift comes amid an ongoing dispute following the trio’s termination on July 1, 2025, and stems from Krafton’s acquisition of Unknown Worlds in 2021 for $500 million, with a potential $250 million payout if the studio had met specific revenue milestones by a 2025 deadline.

According to the lawsuit, McGuire, Gill, and Cleveland were supposed to receive 90% of the $250 million, tying their incentives to the game’s successful development and launch, but their action had led to delays and sparse progress.

The suit further details that the executives had “largely abandoned” their duties as creative and technical leads on the project. Cleveland has been accused of shifting his focus to filmmaking by 2023, and has updated his LinkedIn profile to “part-time”. Later, he abandoned all creative leadership roles by 2024, with internal complaints mentioning a lack of direction as early as 2022.

Gill failed to address the complete abdication of creative and technical leadership, allowing the studio to drift without oversight despite being aware of the ongoing issues at Unknown Worlds. 

McGuire had reportedly shifted his attention to a passion project, Moonbreaker, a turn-based digital miniatures game that ended as a commercial setback in February 2024. He had stopped all technical involvement in Subnautica 2.

As a result of their alleged actions, Subnautica 2’s development slipped years behind schedule, with Krafton’s internal reviews in 2025 describing the game’s builds as “unready” and missing core gameplay mechanics. This led to the game being delayed three times and a degradation of the game’s scope from a fully-prepped Early Access to just a digital sandbox.

To add further fuel to the fire, Unknown Worlds accuses the founders of misappropriating confidential data as they left the studio. Between early June and July 2025, McGuire had downloaded nearly 100,000 files, including hundreds related to Moonbreaker, and Cleveland downloaded around 72,000 files, just eight minutes before his access was revoked.

Gill had exported his entire company email account twice, triggering IT alerts. These were the largest downloads by each of the three founding members at any time since at least 2022.