KRAFTON Loses Phase One Lawsuit Vs Unknown Worlds: What It Means For Subnautica 2

The Court of Chancery of the State of Delaware delivered a massive judgement today on the KRAFTON versus Unknown Worlds founders lawsuit. CEO Ted Gill must be reinstated. It is just the beginning of several provisions decided against the South Korean developer and publisher.

The lawsuit centers around whether KRAFTON unlawfully fired Unknown Worlds' leadership to avoid paying a $250 million earnout tied to the release of Subnautica 2. Back in 2021 KRAFTON acquired Natural Selection and Subnautica developer Unknown Worlds Entertainment for $500 million upfront, plus $250 million in earnout payments tied to revenue through December 31, 2025.

Subnautica 2 was shaping up to ship on August 14, 2025, in early access, according to testimony by Gill. KRAFTOWN’s own financial projections showed that the earnings payout was set to be in the $200–$240 million range, which alarmed CEO Changhan Kim, who felt he had agreed to a bad deal and was worried about being seen as a pushover. Causing Kim to do the following;

• 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.

In the judge's ruling, in addition to Gil being reinstated as CEO of Unknown Worlds effective immediately, the following Phase One claims which the judge ruled all in favor of Unknown World will happen

• 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.

Phase Two rulings, which cover money damages, are reserved for a future proceeding. Following the judge’s ruling, KRAFTON released the following statement.

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.

Subnautica 2 is currently the most wishlisted game on Steam set for a 2026 release, with over 3.8 million wishlist as of February of this year.

When do you think we will get Subnautica 2? Let us know in the comments and chat with us in the GamerzTheory Discord.