Subnautica 2 Leadership Sues Krafton Over $250M Bonus Dispute

The founders of Subnautica 2 studio Unknown Worlds, Charlie Cleveland and Max McGuire, alongside former CEO Ted Gill, are suing parent company Krafton. The legal action escalates a bitter dispute centered on a potential $250 million bonus payment.

In a new statement, Cleveland described recent events as "an explosive and surreal time." He assured fans eagerly awaiting Subnautica 2 that they "all deserve the full story." This is the latest development in a protracted and complex conflict between Unknown Worlds' original leadership and Krafton, the Korean publishing giant behind PUBG.

Krafton acquired Unknown Worlds in October 2021, promising the Subnautica studio would retain its independent operation. Last week, however, former Striking Distance CEO Steve Papoutsis was named the new CEO of Unknown Worlds. The surprise announcement confirmed the immediate replacement of the previous leadership—Ted Gill, Charlie Cleveland, and Max McGuire. Cleveland later called the "shock" decision heartbreaking, stating that "after all these years, to find that I’m no longer able to work at the company I started stings." His statement also suggested Krafton did not consider the game ready for Early Access, contrary to the former team's belief.

Shortly after, reports emerged that Subnautica 2 was delayed to 2026. The delay came just months before Krafton was due to pay a $250 million bonus to the development team if certain revenue targets were met by the end of 2025. With the game's release pushed back, hitting those targets is now unlikely, reportedly voiding the bonus payout.

In a statement to IGN, Krafton insisted the delay was unrelated to "any contractual or financial considerations." The publisher claimed the decision was based on playtest feedback and that delay discussions began before the leadership change.

Krafton later issued a statement alleging the former leadership failed to fulfill their roles. It claimed the company made "multiple requests" for Cleveland and McGuire to resume their duties as game director and technical director, but both allegedly declined.

"Specifically, following the commercial shortcomings of Moonbreaker, Krafton asked Charlie to fully commit to Subnautica 2's development. However, he reportedly chose to focus on a personal film project instead," the statement read. "Krafton believes the absence of core leadership caused repeated directional confusion and major project delays."

Krafton also stated it had allocated 90% of the potential $250 million earn-out compensation to Cleveland, McGuire, and Gill, with the remaining 10% for the rest of the team.

"In addition to the initial $500 million acquisition price, we allocated approximately 90% of the up to $250 million earn-out to the three former executives. This was done with the expectation they would provide decisive leadership and hands-on involvement in Subnautica 2's development," Krafton alleged.

Cleveland has now confirmed the former leadership is pursuing legal action against Krafton. He vehemently denied the claim they intended to "keep [the earnout] all for ourselves," calling it "totally untrue." He did not specify the legal grounds for the lawsuit.

"It continues to be an explosive and surreal time for the Subnautica team and community. None of this is what we wanted. But we are profoundly grateful for the incredible support from everyone. It means everything to us, especially now," Cleveland stated.

"As I wrote last week, we know in our souls that the game is ready for Early Access—that's our standard. We would love nothing more than for you to play it; game developers live for this moment. However, it's no longer within our control.

"We have now filed a lawsuit against Krafton. The details should eventually become public—you all deserve the full story," he continued. "Suing a multi-billion dollar company in a painful, public, and potentially lengthy process was never on my bucket list. But this situation must be corrected. Subnautica has been my life's work, and I would never willingly abandon it or the incredible team that has poured their hearts into it.

"Regarding the earnout, the idea that Max, Ted, and I wanted to keep it all for ourselves is completely false. I'm in this industry out of passion, not for wealth. We have always shared profits with our team, including during the studio sale. You can be certain we intended to do the same with any earnout or bonus. The team deserves it for their incredible work to bring this game to you. Stay tuned."

The controversy has sparked calls for a boycott from some fans, who urge others not to purchase Subnautica 2 and accuse Krafton of "shady business practices."

"I don’t know who’s in the right here, but promising that amount of money on such a premise seems like a bizarre business decision," commented one fan. "Maybe Charlie did nothing wrong, but few could resist pushing out an unfinished product when $250 million is on the line. If Subnautica 2 wasn't ready, it likely would have been rushed out just for the money. Nobody wins in that scenario—except, I suppose, the party with deep pockets."

"We are rapidly approaching a ZA/UM-level mess here," added another, drawing a parallel to the fallout at Disco Elysium developer ZA/UM, where internal leadership disputes led to multiple studios now claiming to work on a "spiritual successor."

"I'm honestly unsure who is right. Both sides have presented serious allegations, and we may not know the full truth until the lawsuit concludes—if ever," suggested a player. "That said, I'm curious if the lawsuit seeks compensation just for the three former leaders or if it aims to include the wider team as well."

"Krafton is a massive corporation with a substantial legal team. It's hard to believe their official statement contains anything close to libel, given how carefully worded it appears," remarked another fan.

"The truth is likely somewhere in between. However, I've noticed nobody has directly denied Krafton's specific allegations yet. Also, as a large company, Krafton might settle for a fraction of the $250 million to resolve this issue quietly."

Krafton has not publicly responded to Cleveland's latest statement. IGN has reached out for comment.