South Korean publisher Krafton has issued a formal, 100+ page response to the lawsuit filed by former Unknown Worlds executives Charlie Cleveland, Max McGuire, and Ted Gill — the leadership team previously steering Subnautica 2. The legal battle revolves around a $250 million earn-out bonus tied to the game’s early access launch.
Background: The Acquisition and Bonus Dispute
Krafton acquired Unknown Worlds in 2021 for $500 million, with an additional $250 million bonus contingent on Subnautica 2 meeting certain sales milestones post-launch. According to court documents, 90% of that bonus would have gone to Cleveland, McGuire, and Gill.
In July — right before Subnautica 2’s planned early access release — Krafton fired all three executives, citing “abandonment of responsibilities,” installed Steve Papoutsis as CEO, and delayed the game’s launch to 2026. The former leadership responded with a breach-of-contract lawsuit, demanding reinstatement and payment of the $250M bonus, accusing Krafton of sabotaging the game to avoid payout obligations.
Krafton’s Defense: Leaders “Lost Interest” in Development
In its court filing, Krafton alleges Cleveland and McGuire shifted focus to personal projects after each received $200 million from the initial deal. Gill, who received $60 million, allegedly pushed for an early release to secure the bonus rather than ensure game quality. The filing even references social media posts by the former executives to support these claims.
Concerns Over Game Quality and Scope
By Q1 2025, Krafton’s internal publishing teams reportedly concluded that Subnautica 2 was far from ready for early access, estimating that the planned build represented just 12% of the originally envisioned scope. The publisher warned that releasing it in such a state could “irreparably harm” the franchise, comparing the potential backlash to the troubled launch of Kerbal Space Program 2.
Confidential Data and Self-Publishing Allegations
The filing further accuses the ousted executives of downloading “massive amounts of confidential information” in violation of the Equity Purchase Agreement, allegedly in preparation to self-publish the game.
The former leadership’s lawsuit contains 186 separate arguments claiming Krafton’s actions were unlawful and deliberately aimed at blocking the bonus payment. With Krafton’s extensive rebuttal now on the record, the next phase of the dispute will determine whether the former executives can counter these claims or if the court sides with the publisher.