Weeks after their sudden and mysterious dismissal from Unknown Worlds by parent-publisher Krafton, the Subnautica 2 studio’s cofounders have filed a lawsuit for breach of contract. On the heart of the grievance are allegations that Krafton tried to sabotage the Early Entry launch for one in every of Steam’s most wishlisted video games with the intention to keep away from having to pay a $250 million bonus. “Within the title of its backside line, Krafton has thrown its guarantees out the window and ripped the sport from the palms of each its creators and its neighborhood,” the lawsuit claims.
These and different allegations are contained in a brand new 58-page lawsuit, a public model of which was filed in Delaware Chancery Court docket on July 16 on behalf of ousted Unknown Worlds cofounders Charles Cleveland, Adam “Max” McGuire, and Edward “Ted” Gill (the group’s authorized staff offered Kotaku with a duplicate). It particulars an alleged ramping-up of efforts by Krafton to delay Subanutica 2’s deliberate 2025 launch with the intention to keep away from triggering provisions from the October 2021 sale of the studio that will result in a $250 million bonus payout if sure gross sales targets had been met via early 2026.
In line with the lawsuit, the phrases of that settlement prohibited Krafton from firing any of the founders with out trigger or interfering within the studio’s enterprise in any method which may impression that payout. Unknown Worlds would “keep operational management of the Group firms in all materials respects, together with (for each current and new merchandise) product roadmap, launch, planning, partnering, budgeting and worker issues” so long as no less than one of many cofounders remained employed there.
The founders declare the enterprise relationship didn’t start going south till earlier this 12 months when projections for Subnautica 2’s gross sales had been shared with Krafton administration, one in every of which confirmed them hitting the targets required for the $250 million payout. “Through the first week of April 2025, Unknown Worlds’ publishing colleagues in Krafton’s El Segundo, California workplace traveled to Korea to finalize the advertising and marketing and promoting technique for Subnautica 2’s launch,” the lawsuit reads. “Upon their return, the El Segundo staff—Krafton staff—reported to Gill that Krafton’s management was not centered on a profitable launch, however as a substitute on the way it might persuade Unknown Worlds to delay the sport.”
Issues got here to a head in a Could 2025 milestone overview, parts of which leaked on-line final week, through which Krafton argued the sport wanted extra content material and improvement time towards the advice of the founders. From there, the founders alleged that Krafton started making an attempt to sabotage the launch by locking down all publishing sources, failing to reply to emails with third-party companions, and claiming management over the ultimate launch date resolution.
“Considered one of Krafton’s El Segundo publishing staff reported to Gill that Krafton Headquarters informed all Krafton groups to cease all artistic duties associated to Subnautica 2,” the lawsuit reads. “The worker’s supervisor even demanded that he and his staff stop communication with Unknown Worlds altogether.”
Then in June, in keeping with the lawsuit, Krafton tried to get Cleveland, McGuire, and Gill to take a decrease payout whereas additionally claiming that the founders had been failing of their contractual obligations to the corporate. “On June 25, 2025, Krafton’s Head of Company Improvement informed Gill that Krafton’s plan was to take away the Unknown Worlds board and hearth the Founders,” the lawsuit reads.
“She warned Gill that ‘the attorneys are able to go.’” They had been fired roughly per week later, with termination letters from Putting Distance Studios CEO Steve Papoutsis, who has since taken over Unknown Worlds, blaming the founders’ “intention to proceed with a untimely launch of Subnautica 2.” In line with the lawsuit, the firings had been made “with out trigger,” and Krafton even went as far as to supply them their “post-termination funds and advantages” for being terminated “with out trigger.”
The lawsuit concludes:
Briefly, Krafton flagrantly breached each the letter and the spirit of the guarantees on the very core of its settlement to buy Unknown Worlds. It promised to depart artistic and operational management within the palms of the Founders. Promise damaged. It promised to seek the advice of with the Founders earlier than taking any motion that would hurt the earnout. Promise damaged. It promised to not take any motion with the first enterprise objective of irritating the earnout. Promise damaged. And it promised to not terminate the Founders with out Trigger. Promise damaged.
The founders’ facet of the story comes after weeks of obscure statements on Reddit and complicated press releases from Krafton, who has argued that the founders had been fired for failing to get Subnautica 2 prepared for a profitable Early Entry launch. Specifically, the leaked milestone overview factors to considerations {that a} lack of biomes and story content material would end result within the sport failing to satisfy participant expectations for a sequel. It’s denied that the possible payout, 10 % of which was attributable to a few of Unknown Worlds’ roughly 100 builders, had something to do with the administration shakeup.
Caught within the center are these engaged on the sport who nonetheless have to ship it, by some means. With Subnautica 2 now popping out in 2026, Krafton has promised staff that it’ll lengthen the bonus payout window to make up for the delay in addition to advance them cash from subsequent 12 months’s profit-sharing pool, Bloomberg reported. It’s unclear what injury, if any, has been carried out to the sport’s prospects amongst followers left making an attempt to make sense of who to consider and who to assist. The Subnautica subreddit has been a rollercoaster journey of gamers arguing over boycotts vs. endurance as they await all of the information to come back out, and for the eventual launch of the sport to hopefully succeed.
Krafton declined to remark.
Replace 7/16/2025 4:09 p.m. ET: Added response from Krafton and hyperlink to lawsuit offered by Charlie Cleveland.
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