[UPDATE #2 - March 18, 2026] Just one day after the judge's ruling, Unknown Worlds has announced that Subnautica 2 will finally launch on early access at some point in May. Read more in our news story.
[UPDATE #1] We have just received the following statement from KRAFTON:
KRAFTON puts players at the heart of every decision, and that will never change. Over the past several months, KRAFTON and the Unknown Worlds team have worked tirelessly to strengthen the game and prepare it for an Early Access release, with a continued focus on delivering the best possible experience for the Subnautica community. We look forward to pushing out the newly updated version as soon as possible for players.
While we respectfully disagree with today’s ruling, we are evaluating our options as we determine our path forward. Today’s ruling does not resolve the former executives’ claim for damages or an earnout related to Subnautica 2, with further litigation still pending. In the meantime, KRAFTON's immediate focus remains unchanged: delivering the best possible game to Subnautica’s fans.
[ORIGINAL STORY] The Court of Chancery of the State of Delaware delivered an explosive judgment today on the KRAFTON versus Unknown Worlds founders lawsuit: CEO Ted Gill must be reinstated, and that's just the start of a series of provisions decided against the South Korean developer and publisher.
The case is officially known as Fortis Advisors LLC v. Krafton, Inc., because Fortis Advisors sued on behalf of Gill and the other studio founders (Charlie Cleveland, Max McGuire). It centers on whether Krafton unlawfully fired the Unknown Worlds leadership to avoid paying a $250 million earnout tied to the release of Subnautica 2.
Let's walk through what happened chronologically. As you might remember if you've been following gaming coverage for a few years, KRAFTON acquired Natural Selection and Subnautica developer Unknown Worlds Entertainment in October 2021 for $500 million upfront, plus up to $250 million in contingent earnout payments tied to revenue through December 31, 2025. The aforementioned three founders were contractually guaranteed operational control of the studio for the duration of the earnout period. They could only be fired for very strictly defined causes: felony conviction, intentional fraud or dishonesty, gross misconduct, or wrongful disclosure of trade secrets.
By Spring 2025, Subnautica 2 was shaping up well and heading toward an internally decided August 14, 2025 early access launch, according to a testimony by Gill. Publicly, we only knew the studio was targeting a 2025 early access debut on PC and Xbox. KRAFTON's own financial projections regarding the earnout they'd have to pay ranged between a conservative $191.8 million and a higher-end $242.2 million, potentially coming very close to the full $250 million earnout and alarming CEO Changhan (CH) Kim, who felt he'd agreed to a bad deal and feared being seen as a "pushover."
Kim then:
- Consulted ChatGPT on how to avoid paying the earnout and formed an internal task force called "Project X" to either negotiate away the earnout or execute a corporate takeover of Unknown Worlds. In the proceeding, Kim would later admit to deleting relevant ChatGPT logs.
- Locked Unknown Worlds out of its own Steam publishing platform, preventing the early access release of Subnautica 2
- Posted unauthorized messages on the Unknown Worlds and Subnautica websites, falsely implying that Cleveland and McGuire had been asked to return to lead the sequel
- On July 1, 2025, Kim issued termination notices to Cleveland, McGuire, and Gill, citing a single reason: their "intention to proceed with a premature release of Subnautica 2".
- Replaced the three with KRAFTON representatives on the board, and appointed Steve Papoutsis (CEO of another KRAFTON subsidiary, Striking Distance Studios, the team behind The Callisto Protocol) as part-time CEO of Unknown Worlds.
KRAFTON's Defense and Why It Failed
KRAFTON's original justification (premature release) was abandoned entirely during litigation. It then advanced two new arguments:
- The founders had secretly "semi-retired": Cleveland was working 4 hours a week on a film career, and McGuire had shifted to social impact research, which they claimed constituted intentional dishonesty.
- The data downloads: before their terminations, the founders had downloaded large volumes of company files to personal devices, which KRAFTON claimed was terminable misconduct.
The court rejected both. Regarding the role changes, the publisher was fully informed and explicitly accepted Cleveland and McGuire's reduced roles, including receiving podcast links, being told directly about the film projects, and processing the salary reductions (from $400K to $100K) through its own HR systems; thus, there was no deception. On the data downloads, the court found these were defensive, protective measures taken during an escalating corporate crisis, not acts of theft or dishonesty. The files were kept confidential and promptly returned when requested.
The court also applied the mend-the-hold doctrine (KRAFTON couldn't switch justifications mid-litigation when its original one failed) and the after-acquired evidence doctrine, finding Krafton hadn't met the high bar required to retroactively justify the terminations.
The Ruling
The court found entirely in favor of Fortis and Unknown Worlds on all Phase One claims:
- As mentioned above, Ted Gill was reinstated as CEO of Unknown Worlds with full operational authority, effective immediately
- KRAFTON is enjoined from interfering with the early access launch of Subnautica 2
- KRAFTON is ordered to restore Gill's access to Steam immediately
- The July 1, 2025 board resolution blocking the release of Subnautica 2 was declared ineffective
- The earnout Testing Period has been extended by 258 days (the duration of Gill's ouster), moving the base deadline from December 31, 2025 to September 15, 2026, with Fortis retaining its contractual right to extend further to March 15, 2027
- Cleveland and McGuire have not been reinstated. The Delaware court found that restoring Gill alone is sufficient to vindicate the founders' contractual rights, and compelling their formal return was deemed unnecessary.
Critically, Phase Two, which will cover money damages and whether KRAFTON deliberately impaired the earnout, remains reserved for a future proceeding. That said, given today's ruling, the founders seem to hold a strong position, while the exact opposite is true for KRAFTON.
Where that leaves Subnautica 2 remains to be seen. The game, which is the most wishlisted Steam title due in 2026, just received a new devlog about building bases. You can find it embedded right above.
About the author: With over two decades of experience in gaming journalism, Alessio Palumbo has led the gaming vertical at Wccftech since August 2015. He started working at a young age for Italian websites like Everyeye.it, Gamestar.it, Nextgame.it, and Multiplayer.it before kickstarting the indie English-language publication Worlds Factory as its founder and Editor in Chief. In the last decade, he has coordinated the overall output of Wccftech's gaming section, managed PR relations, assigned reviews, produced daily news coverage, edited gaming content as needed, and delivered game reviews. Arguably, his trademark content is the long series of exclusive developer interviews that have been cited by Wikipedia and by the biggest news media and gaming publications. His passion for technology also makes him knowledgeable when it comes to gaming hardware and tech. His favorite genres include RPGs, MMORPGs, and action/adventure games.
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