The legal battle between publisher Krafton and studio Unknown Worlds co-founders Charlie Cleveland, Ted Gill, and Max McGuire has resulted in more details about the conflict being revealed. The lawsuit was filed by the three co-founders, and accused Krafton of intentionally delaying the Early Access release of Subnautica 2 in order to avoid paying the studio $250 million.
A new filing (via GamesRadar) by Krafton has responded to the lawsuit by accusing the co-founders of being responsible for the unfinished state of Subnautica 2. In its filing, the publisher has accused the trio of having “resorted to litigation to demand a multimillion-dollar payday they haven’t earned” instead of putting in effort to meet the conditions necessary for the $250 million payout.
Further in its filing, the publisher also noted that the three co-founders had presented themselves as “the visionaries behind Unknown Worlds Success and they key to its future” when negotiating Krafton’s acquisition of the studio. The publisher then offered a $250 million incentive payout to “keep them invested” in working at the studio and on Subnautica 2.
“The plan quickly unraveled,” reads the filing. “Having sold [Unknown Worlds], Cleveland and McGuire, who pocketed almost $200 million apiece from the sale, and Gill, who received $60 million, quickly lost interest in developing Subnautica 2. Cleveland and McGuire abandoned their roles as studio-wide Game Director and Technical Director to focus on their personal passion projects and quit making games for Unknown Worlds entirely. And Gill, who remained, focused on leveraging his operational control to maximize the earnout payment, rather than developing a successful game.”
To back up these accusations, Krafton has provided citations with quotes from Cleveland dating back to 2024 and 2025 that he “was not actually working on Subnautica [2]” and that “he was no longer working on games, but […] working on a couple films.” There are also quotes by McGuire stating that he had started working on projects that “fall outside of [Unknown Worlds’] main development activities.”
Krafton has also said in its filing that McGill, Cleveland and McGuire have “secretely downloaded massive amounts of confidential information from Unknown Worlds in further violations of the [acquisition agreement].” The publisher went on to also note that the insistence of an early release of Subnautica 2 was “singularly driven by self-interest in obtaining the ernout.”
“At every turn during development, the Key Employees were laser focused on avoiding ‘a timeline that doesn’t tank the earnout opportunity’ and scheduling the release to maximize their payments.”
“Conversations throughout the post-acquisition period make clear the Key Employee’s focus was on their payday, and not on the game. As early as 2022, an employee who was due to receive a portion of the earnout stated that despite the significant delays in the game, he was confident ‘Ted [Gill] will concoct a scheme to get us that earnout.”
Subnautica 2 was originally intended to be released as an Early Access game this year. However, Krafton had decided to push the release of the game back. This decision has seemingly led to the legal battle we see unfolding now. Back in July, Krafton had said that it delayed the game because an “absence of leadership” led to the title not being fit for release even through Early Access.
Cleveland had announced that he, along with fellow co-founders Gill and McGuire, would be filing a lawsuit against Krafton back in July, accusing Krafton of engaging in a “months-long” campaign to delay the release of Subnautica 2 in order to avoid the $250 million payout that was contingent on revenue targets being met.
