Krafton Claims Unknown Worlds Co-Founders’ Testimony Proves They “Do Not Want, Nor Deserve, Their Jobs Back” in Ongoing Subnautica 2 Legal Battle
The legal conflict between Krafton and Unknown Worlds co-founders Charlie Cleveland, Ted Gill, and Max McGuire has escalated again, becoming one of 2025’s most dramatic and unexpected industry disputes. At the center of the clash is Subnautica 2’s development, an alleged $250 million earnout bonus, accusations of abandonment, claims of misconduct, and even references to using ChatGPT for legal strategy.
Following testimony given between November 17 and 19 at the Delaware Court of Chancery, Krafton now asserts that the evidence presented in court undermines the co-founders’ claims and instead demonstrates they neither want nor deserve to be reinstated at Unknown Worlds.
According to Krafton, the testimony makes it “unequivocally clear there was no preconceived plan by Krafton to remove Unknown Worlds’ leadership to avoid the earnout obligation.” Instead, Krafton argues that the co-founders “lied and tried to hide their abandonment [of Subnautica 2] because they wanted Krafton to pay them hundreds of millions of dollars for nothing.”
Krafton shared statements, logs, and private messages presented during the trial, including a January 8, 2024 private admission from Cleveland stating, “I stopped working four months ago and have entered semi-retirement.” Likewise, McGuire’s emails and logs reveal that he had stopped performing key responsibilities and had even privately informed Gill and Cleveland that he planned to quit in April 2024.
Other internal comments highlighted team frustration. Lead designer Anthony Gallegos reportedly stated that he “can't even get Max to look at some code for [Subnautica 2] water to help us, but he'll make money off a sale from four years ago and get paid to do nothing.”
The testimonies also addressed internal communication breakdowns. For example, on August 5, 2024, an internal leadership update email omitted all Krafton staff from distribution. Cleveland confirmed Krafton was excluded, though he did not directly state it was intentional. Cleveland also admitted that he never informed Krafton CEO Changham Kim of his disengagement from Subnautica 2, despite standing to gain significantly from the earnout. When pressed in court on why he failed to notify Kim, Cleveland conceded, “That’s not a great reason, I admit.”
McGuire and Gill’s statements added further weight to Krafton’s narrative. In a June 10, 2025 call, Gill reportedly said: “If you [Krafton] want to delay the game, just pay it. Agree to pay it now…you can pay it over two years…but just pay it.”
Krafton maintains that this behavior proves the co-founders placed earnout compensation above company obligations. With Subnautica 2 reportedly behind schedule, Krafton argues that leadership abandonment, internal confusion, and withheld information contributed to delays rather than any deliberate attempt by the publisher to avoid the earnout.
This latest round of testimony marks a significant blow to the co-founders’ case. The courtroom narrative is shifting toward Krafton’s position, though ultimate judgment has yet to be rendered.
A full recap of events, including allegations, lawsuits, leaks, and internal disputes, can be found in the timeline below.
Timeline of the Subnautica 2 Legal Saga
July 2 – Unknown Worlds co-founders Cleveland, Gill, and McGuire are fired and replaced by former Striking Distance Studios head Steve Papoutsis. Krafton cites a commitment to delivering a game fans deserve.
July 3 – Unknown Worlds publishes a community letter addressing fan concerns about the abrupt leadership change.
July 4 – Cleveland claims on Reddit that Subnautica 2 was ready for early access, saying their firing was “quite a shock.”
July 9 – Bloomberg reports Krafton delayed Subnautica 2 to avoid paying a $250 million earnout. Hours later, Krafton confirms the delay but says the game was not ready based on internal testing.
July 10 – Krafton accuses the co-founders of abandoning their roles. Krafton states 90% of the $250 million bonus would go to the co-founders. The same day, the co-founders file a lawsuit against Krafton.
July 11 – A leaked milestone review document appears on Reddit, supporting Krafton’s claim the game was not ready.
July 13 – Krafton confirms leaked documents are real.
July 17 – Co-founders allege Krafton sabotaged Subnautica 2 and that the CEO said paying the earnout would be “financially disastrous and embarrassing.”
August 12 – Krafton counters that the co-founders were absentee leaders who abandoned their roles.
August 20 – Unknown Worlds files its own lawsuit against the co-founders for alleged misconduct and theft of confidential information.
September 19 – The court denies two Krafton motions; Krafton reverses one of its earlier arguments.
September 24 – Krafton alleges the founders stole a “blueprint” of Subnautica to release it independently.
November 18 – Co-founders allege Krafton used an internal codename “Project X” to avoid the earnout, and that the CEO asked ChatGPT how to avoid paying.
November 20 – Krafton claims Cleveland made racist comments about Korea in litigation notes.
November 17–19 – Co-founder testimony is heard in court, leading to Krafton’s latest statements.
What is your view on Krafton’s latest claims? Do you think the court will ultimately side with the publisher or the original Subnautica creators?
