Krafton Lawsuit

The Subnautica 2 lawsuit was a dispute between Krafton and Unknown Worlds' former leaders over a $250 million earnout tied to the game. A Delaware court reinstated CEO Ted Gill in March 2026, and the two sides settled on Jul 1, 2026.

The Subnautica 2 lawsuit was a fight between Krafton, which bought Unknown Worlds in 2021, and the studio's former leaders, CEO Ted Gill and co-founders Charlie Cleveland and Max McGuire, over an earnout of up to $250 million tied to the game's revenue. Krafton removed the three in July 2025 and Subnautica 2 was delayed to 2026; the former shareholders sued, saying the delay was meant to avoid the payout, and Krafton countersued. On Mar 16, 2026 the Delaware Court of Chancery reinstated Gill as CEO and extended the earnout period, and on Jul 1, 2026 the sides announced a settlement and dropped all claims. This page reports each side's claims as theirs and the court's findings as the court's.

Quick facts

Case	Fortis Advisors, LLC v. Krafton, Inc., Delaware Court of Chancery, C.A. No. 2025-0805-LWW
Plaintiff	Fortis Advisors, for Unknown Worlds' former shareholders
Judge	Vice Chancellor Lori W. Will
At stake	Up to $250 million in earnout payments
Removals	July 2025: Ted Gill, Charlie Cleveland, Max McGuire
Ruling	Mar 16, 2026: Gill reinstated, earnout period extended by 258 days
Settlement	Jul 1, 2026, all proceedings dismissed
Leadership since	Gill stepped down; an outside CEO to be hired (no name announced as of Nov 4, 2026)

The 2021 acquisition and the earnout

Krafton, the South Korean publisher of PUBG, acquired Unknown Worlds in October 2021 (Game Informer, Oct 29, 2021). The price was not disclosed then; the court record later put it at $500 million up front plus up to $250 million in earnout payments tied to revenue after closing (Mayer Brown for the Harvard Law School Forum on Corporate Governance, Apr 20, 2026). According to the court's findings, Krafton's own projections in mid-2025 put the earnout at about $191.8 million in a base case and $242.2 million in a best case.

The July 2025 removals and delay

Krafton sent termination letters to Gill, Cleveland and McGuire on Jul 1, 2025 (Harvard Law School Forum) and announced, "effective immediately", that they no longer led the studio, giving no public reason (DualShockers via OpenCritic, Mar 17, 2026). Steve Papoutsis, formerly head of Striking Distance Studios, became CEO. The team wrote on Jul 3, 2025 that the people making the game "remains completely unchanged" and that the game would stay "single-player first" with no microtransactions (Unknown Worlds). On Jul 9, 2025 the studio delayed Early Access from 2025 to 2026, citing playtest feedback (Unknown Worlds).

The suit and Krafton's counterclaims

Fortis Advisors, representing the former shareholders, sued Krafton in the Delaware Court of Chancery in July 2025. The founders alleged that Krafton delayed Subnautica 2 to avoid the $250 million earnout tied to 2025 revenue targets (Engadget, Jul 1, 2026). Krafton countersued, claiming the leaders had abandoned the game and taken Subnautica 2 materials and documents (Game Developer, Jul 1, 2026).

Project X, as the court found it

A pre-trial brief in November 2025 alleged that Krafton CEO CH Kim formed a task force called "Project X" to take control of Unknown Worlds, and that he asked ChatGPT how to avoid the payout (Game Developer, May 15, 2026). In its post-trial opinion the court found that Project X was formed at an AI chatbot's suggestion, with a mandate to renegotiate the earnout or take over the studio (Harvard Law School Forum). Those are the court's findings in a case that later settled.

The Mar 16, 2026 ruling

Vice Chancellor Lori W. Will issued the post-trial opinion on Mar 16, 2026. According to Mayer Brown's summary, the court:

reinstated Ted Gill as CEO with "full operational authority";
barred Krafton from overriding his authority over the Early Access launch, and ordered his access to Steam's publishing platform restored;
did not reinstate the co-founders to their roles;
extended the earnout measurement period by 258 days, the length of Gill's removal;
left damages, and whether the earnout had been impaired, to a second phase.

Source: Harvard Law School Forum on Corporate Governance, Apr 20, 2026.

The leak dispute

Days after the ruling, IGN published an internal memo from Steve Papoutsis, by then a Krafton executive, announcing a May Early Access window. Gill's lawyers wrote to the judge that Krafton had violated the ruling; Krafton denied it the next day (Notebookcheck, Mar 20, 2026). Unknown Worlds announced the date, May 14, 2026, on Apr 30 (Early Access Release Date), and the launch sold 2 million copies within 12 hours (Sales and Player Count).

The Jul 1, 2026 settlement

On Jul 1, 2026 Krafton, Unknown Worlds, Gill, Cleveland and McGuire announced that they "have reached a mutual settlement and agreed to dismiss all pending legal proceedings" (Game Developer). Its public terms:

Krafton pays bonuses to all Unknown Worlds staff, including those hired after the 2021 deal, in three annual installments; the amount was not disclosed, Gill told Bloomberg (Kotaku).
Gill said staff would be "compensated significantly more" than the original deal required (Engadget).
Gill stepped down as CEO by mutual agreement, saying new leadership was "the best way for the studio to move forward", and the companies would hire a CEO from outside both.
Krafton said "Unknown Worlds will continue leading development", with Krafton supporting the game.

Leadership since

0:00 As of Nov 4, 2026 no new CEO has been named in the sources read. The game is led day to day by Creative Director Anthony Gallegos, who fronts the update vlogs, with Executive Producer Fernando Melo (Unknown Worlds press release, Jul 9, 2026). Updates have kept coming on the May 2026 roadmap, with Early Access 2 due in December 2026. The studio's history is on Unknown Worlds.

Frequently asked questions

What was the Subnautica 2 lawsuit about? It was about a $250 million earnout: Unknown Worlds' former shareholders said Krafton delayed Subnautica 2 to avoid paying it, and Krafton countersued, saying the leaders had abandoned the game.

Who won the Subnautica 2 lawsuit? The court ruled for Ted Gill on Mar 16, 2026, reinstating him and extending the earnout period, and the case then ended in a settlement on Jul 1, 2026 before damages were decided.

Is Ted Gill still CEO of Unknown Worlds? No. Ted Gill stepped down by mutual agreement in the Jul 1, 2026 settlement, and Krafton and the founders said an outside CEO would be hired.

What was Project X at Krafton? Project X was a Krafton task force that, the Delaware court found, was formed at an AI chatbot's suggestion to renegotiate the Subnautica 2 earnout or take over Unknown Worlds.

Did the lawsuit delay Subnautica 2? Subnautica 2's Early Access was delayed from 2025 to 2026 on Jul 9, 2025, days after the removals; Unknown Worlds cited playtest feedback, while the founders alleged the delay was meant to avoid the earnout.

Does Krafton still own Unknown Worlds? Yes. Krafton still owns Unknown Worlds, and under the settlement Unknown Worlds continues to lead Subnautica 2's development.