Unknown Worlds Sues Former Employees

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21 August 2025 10:55

Unknown Worlds Entertainment and its parent company Krafton Inc., as the publisher files a lawsuit against three former senior executives behind the Subnautica franchise. The legal action targets studio co-founder Charlie Cleveland, along with Adam McGuire and Ted Gill, accusing them of multiple breaches of contract and fiduciary responsibility tied to the development of Subnautica 2.

In a heavily redacted court filing shared with GamesIndustry.biz, Krafton alleges the former leaders committed breach of equity purchase agreement, breach of employment agreement, breach of the implied covenant of good faith and fair dealing, and violated their fiduciary duty of care while acting as directors of Unknown Worlds.

The lawsuit centers around a $250 million earnout bonus tied to revenue milestones for Subnautica 2’s early access release in 2025. Krafton claims the former leadership placed their personal financial interests above the long-term success of the game, stating that “they demanded the Earnout, not the early access release that would best entice the gaming community into the Subnautica 2 world. Personal (not Company) goals were the priority for [them].”

Krafton further alleges that Cleveland, McGuire, and Gill threatened legal action against the company and pushed for a release date that would meet the payout conditions rather than benefit the player community. The publisher says it instead recommended a delay to "safeguard the quality of Subnautica 2 and maintain player trust."

The lawsuit also claims the trio attempted to undermine Krafton’s role in the sequel’s launch by proposing to self-publish Subnautica 2, excluding the publisher from marketing, promotion, and distribution efforts. Krafton says this led to their termination, stating that the move left the company with "no choice but to terminate their employment."

In a striking claim, Krafton accuses the former executives of downloading tens of thousands of internal company files and emails prior to their dismissal. According to the lawsuit, "These downloads were, by far, the largest downloads for each of the three Key Employees at any time since at least 2022." The company also contends the three "refused" to return or confirm the status of any confidential materials still in their possession.

The legal clash follows a separate lawsuit made public last month, in which the former shareholders of Unknown Worlds, represented by Fortis Advisors LLC, sued Krafton over allegedly delaying Subnautica 2 to avoid the $250 million bonus payment. That suit accuses Krafton of using “pressure tactics” to influence development timelines for financial gain.

More:Logitech Partners with University of Limerick

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Unknown Worlds Sues Former Employees

More

21 August 2025 10:55

Tags: Unknown Worlds

Unknown Worlds Entertainment and its parent company Krafton Inc., as the publisher files a lawsuit against three former senior executives behind the Subnautica franchise. The legal action targets studio co-founder Charlie Cleveland, along with Adam McGuire and Ted Gill, accusing them of multiple breaches of contract and fiduciary responsibility tied to the development of Subnautica 2.

In a heavily redacted court filing shared with GamesIndustry.biz, Krafton alleges the former leaders committed breach of equity purchase agreement, breach of employment agreement, breach of the implied covenant of good faith and fair dealing, and violated their fiduciary duty of care while acting as directors of Unknown Worlds.

The lawsuit centers around a $250 million earnout bonus tied to revenue milestones for Subnautica 2’s early access release in 2025. Krafton claims the former leadership placed their personal financial interests above the long-term success of the game, stating that “they demanded the Earnout, not the early access release that would best entice the gaming community into the Subnautica 2 world. Personal (not Company) goals were the priority for [them].”

Krafton further alleges that Cleveland, McGuire, and Gill threatened legal action against the company and pushed for a release date that would meet the payout conditions rather than benefit the player community. The publisher says it instead recommended a delay to "safeguard the quality of Subnautica 2 and maintain player trust."

The lawsuit also claims the trio attempted to undermine Krafton’s role in the sequel’s launch by proposing to self-publish Subnautica 2, excluding the publisher from marketing, promotion, and distribution efforts. Krafton says this led to their termination, stating that the move left the company with "no choice but to terminate their employment."

In a striking claim, Krafton accuses the former executives of downloading tens of thousands of internal company files and emails prior to their dismissal. According to the lawsuit, "These downloads were, by far, the largest downloads for each of the three Key Employees at any time since at least 2022." The company also contends the three "refused" to return or confirm the status of any confidential materials still in their possession.

The legal clash follows a separate lawsuit made public last month, in which the former shareholders of Unknown Worlds, represented by Fortis Advisors LLC, sued Krafton over allegedly delaying Subnautica 2 to avoid the $250 million bonus payment. That suit accuses Krafton of using “pressure tactics” to influence development timelines for financial gain.

More:Logitech Partners with University of Limerick

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