Krafton Claims Unknown Worlds Co-Founders Testimony Proves Founders “Do Not Want, Nor Deserve, Their Jobs Back”

Update 16/03/2026: A Delaware Judge has ordered Krafton to reinstate Ted Gill as CEO of Unknown Worlds and restore control of Subnautica 2 to Gill, ruling in favor of the Unknown Worlds co-founders. Read the full story here.

Original Story:

The legal battle between Unknown Worlds co-founders Charlie Cleveland, Ted Gill, and Max McGuire and Krafton over the development of Subnautica 2 has been one of the biggest surprise stories of the year for 2025. It's had several twists and turns, the most recent of which being accusations of racist comments made by Cleveland towards Korea, and Krafton's chief executive officer asking ChatGPT if there was a way to avoid paying Unknown Worlds the $250 million bonus that is at the heart of this battle.

If you've not been following along, there is a bullet-point list at the bottom of this article taking you through all of our coverage of the story so far. Today's latest update comes after recent testimony given by Unknown Worlds co-founders Cleveland, Gill, and McGuire during a trial from November 17-19, 2025, in the Delaware Court of Chancery.

These testimonies given by the co-founders and the evidence displayed at the trial, in Krafton's view, prove a couple of key things. Firstly, the evidence and testimony make it "unequivocally clear there was no preconceived plan by Krafton to remove Unknown Worlds' leadership to avoid the earnout obligation," as has been previously alleged by the co-founders.

Secondly, Krafton states that the testimony and evidence prove that the co-founders "lied and tried to hide their abandonment [of Subnautica 2 and their duties] because they wanted KRAFTON to pay them hundreds of millions of dollars for nothing."

According to Krafton's timeline of events, Cleveland and McGuire were hiding the fact that both of them were checked out from their work at Unknown Worlds on Subnautica 2 until Krafton found out on May 20, 2025, and prior to that date, Gill and other members of Unknown Worlds were being forced into awkward positions where they had to avoid telling Krafton the truth about Unknown Worlds' leadership situation in order to protect the earnout.

Krafton shared excerpts with Wccftech from the evidence and testimony presented, including statements attributed to Cleveland like "I stopped working four months ago and have entered semi-retirement," which Cleveland made on January 8, 2024, in a private message. Cleveland previously admitted that he no longer wanted to work at Unknown Worlds and that he was burned out, though during this trial process he has come back to say he is 'fired up now' and wants to return to work.

A statement shared that was attributed to McGuire emailing the core Unknown Worlds team regarding his title as technical director on January 10, 2024, reads, "I've continued to do bits and pieces of the job as needed, but I stopped using that title years ago when I felt it no longer reflected my primary contribution to the company."

Another statement attributed to McGuire in his personal log on April 29, 2024, reads, "At home, I met with Charlie and Ted to let them know I'm quitting," followed by a statement from Cleveland on the same day where Cleveland expresses sadness at McGuire leaving, and saying that he is "pretty sure [he'll] be doing the same thing."

A statement attributed to Subnautica 2 lead designer Anthony Gallegos seems to describe the frustrations felt by the rest of the Unknown Worlds team, with Gallegos claiming he "can't even get Max [McGuire] 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."

All of that feels pretty damning against Cleveland, McGuire, and Gill, and their testimonies don't make their situation look any better. Per testimony from Cleveland, an email sent to Unknown Worlds staff titled "Updates to Our Leadership Team's Roles and Responsibilities" on August 5, 2024, excluded employees from Krafton. Cleveland did not confirm that Gill intentionally excluded Krafton staff, only that no one from Krafton was listed in the email.

Cleveland also admitted in his testimony that he did not directly tell Krafton CEO, Changham Kim, about his disengagement from work at Unknown Worlds. When Krafton's representation put to Cleveland, "You stood to gain potentially tens of millions of dollars more in earnout, and you couldn't send him [Changham Kim] an email because your arms were hurting? Is that your testimony?" Cleveland responded, "That's not a great reason, I admit."

Cleveland also admitted that Changham Kim "seemed alarmed" when he told Kim that he was "no longer involved in Subnautica at all," and could not provide Kim with an update on the state of the game's development.

A further statement from Gill, taken from an audio transcription of a June 10, 2025, call, reads, "If you [Krafton] want to delay the game, just pay it. Just pay the earnout...agree to pay it now, we can sign something tomorrow...it'll be paid, and we'll give you flexibility on paying it. You can pay it over two years, instead of all at once. But just pay it."

With all of the evidence presented last month at the Delaware Court of Chancery and testimonies from the co-founders, Krafton holds firm in its claim that the co-founders "were always concerned first and foremost about the earnout."

We'll continue to update you on this story as it progresses, though this latest batch of evidence seems to be a huge blow to the co-founders' chances of winning the case.

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If you need a recap on this whole saga, here's a timeline with everything save for today's news to catch you up:

• On July 2, it was reported that the founders of Unknown Worlds, Ted Gill, Max McGuire, and Charlie Cleveland, were fired and replaced by former Striking Distance Studios head Steve Papoutsis. No concrete explanation for their dismissal was offered at the time, with Krafton instead emphasizing its commitment to delivering a game that players deserved.
• On July 3, a statement from the Unknown Worlds website did its best to calm concerns from fans about the fact that the three original core creatives behind Subnautica were suddenly not at the studio.
• The next day, on July 4, the situation began to grow even more confusing, as Cleveland claims Subnautica 2 was "ready for early access release" and that his and his fellow co-founders' dismissals were "quite a shock."
• Five days later, on July 9, a report from Bloomberg adds a shocking allegation to the mix: that Krafton was delaying Subnautica 2 to avoid paying Unknown Worlds a $250 million bonus the studio would have been owed if they hit particular sales goals, which they would have done with Subnautica 2's launch. The delay was confirmed hours after the report went live, and Krafton held that the delay was due to Subnautica 2 not being ready, citing feedback from internal playtesting.
• On July 10, Krafton went on the offensive, blaming co-founders Gill, Cleveland, and McGuire, claiming they had "abandoned" their roles to pursue personal interests. Krafton also clarified that 90% of the aforementioned $250 million bonus would go directly to the co-founders, with the rest to be split among the employees. Gill, Cleveland, and McGuire held that they always intended to distribute the bonus to other employees.
• Also on July 10, Gill, Cleveland, and McGuire filed a lawsuit against Krafton.
• On July 11, an internal document from a milestone review of Subnautica 2's progress leaked on Reddit, seemingly showing further support to Krafton's claims that the game wasn't ready, citing a lack of content on top of previously mentioned internal playtest feedback.
• Over the following weekend on July 13, Krafton confirmed the documents to be real.
• A few days later, on July 17, when the co-founders' suit against Krafton became publicly available, we discovered allegations that Krafton had been sabotaging Subnautica 2 to ensure it would be delayed. There was even a claim that the CEO of Krafton met with the co-founders and admitted that having to pay out the $250 million bonus "could be disastrous financially and hugely embarrassing for Krafton." It also attacks every other claim Krafton had made up to this point, and that the feedback received on Subnautica 2 playtesting "unequivocally proved" the game was ready for an early access launch.
• Jumping ahead to August 12, Krafton shoots back at Gill, Cleveland, and McGuire's lawsuit, again arguing that the co-founders were absentee leaders who abandoned their roles, and continued to hold that the game wasn't ready for an early access launch.
• Eight days later, Unknown Worlds files its own separate lawsuit against its co-founders, telling Wccftech in an email that this suit "is a direct response to their misconduct, including the theft of confidential information and attempts to pursue personal financial gain to the detriment of the company's interests."
• On September 19, a report revealed that the court denied two of Krafton's motions, and Krafton seemingly U-turned on one of its key arguments regarding why the co-founders were fired in the first place.
• On September 24, new motions from Krafton alleged that the founders stole what Krafton called "effectively, a blueprint" for Subnautica in an attempt to further its argument that the co-founders intended to release Subnautica 2 on their own.
• On November 18, the co-founders and their legal team allege that Krafton's plan to avoid paying the $250 million earnout was codenamed "Project X" internally within Krafton, and Krafton's chief executive officer, Changham Kim, asked ChatGPT how to avoid paying Unknown Worlds the $250 million bonus.
• On November 20, Krafton claimed that co-founder Charlie Cleveland made racist comments regarding Korea in his preparation notes for the litigation between Cleveland, his fellow co-founders, and Krafton, and that Cleveland said, "history will remember that Krafton was bad."

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