Krafton Settles Unknown Worlds Lawsuit Over Subnautica 2

Krafton has settled its legal dispute with Unknown Worlds Entertainment and former studio leaders Charlie Cleveland, Ted Gill, and Max McGuire. The agreement ends a year-long battle over Subnautica 2 and a disputed $250 million USD earnout. Both sides have agreed to dismiss all pending legal proceedings.

Unknown Worlds will continue developing Subnautica 2 with Krafton's support. Gill will also leave the company after mutually agreeing to step down.

The settlement also changes how the earnout will be distributed. Bloomberg reported that every Unknown Worlds employee will now receive a bonus. This includes developers who joined after Krafton acquired the studio in 2021.

The original agreement mainly covered the three former executives and employees who were with the studio during the acquisition. It also set aside 10% of the earnout for staff. Gill stated that developers will be compensated “significantly more" than originally planned. The bonuses will be paid in three annual installments, alongside additional incentives tied to future Subnautica 2 updates.

$250 Million Earnout Dispute Sparked Legal Battle

The legal dispute began in July 2025 after former Unknown Worlds leaders Ted Gill, Charlie Cleveland, and Max McGuire accused Krafton of delaying Subnautica 2's planned 2025 Early Access launch to avoid the $250M earnout. They alleged the publisher intentionally delayed the release to avoid the performance-based payout tied to the game's revenue targets.

The complaint alleged Krafton pulled marketing support, delayed key partnerships, and failed to complete agreed pre-launch work. The founders argued that Unknown Worlds retained operational control under the acquisition agreement. They also claimed Krafton removed them without contractual cause after they refused to delay the launch.

According to the lawsuit, Krafton then postponed Subnautica 2 to 2026, while the founders sought financial damages and the restoration of creative and operational control.

Settlement Ends Year-Long Court Battle

Krafton denied the allegations throughout the case. It argued the delay was needed to ensure Subnautica 2 met player expectations. The publisher also accused the former executives of threatening to self-publish the game, neglecting their duties, and downloading company files before their dismissal.

However, the founders denied those claims.

A Delaware court later reinstated Gill as chief executive officer (CEO) and extended the earnout period while the case continued. After Subnautica 2 sold more than 4M copies, both sides settled. Gill commented that new managerial leadership is “the best way for the studio to move forward."

Krafton and Unknown Worlds will now begin searching for an external CEO.