Court Rules in Favor of Unknown Worlds Co-Founders in Subnautica 2 Lawsuit Against Krafton

A Delaware court has ruled in favor of Unknown Worlds co-founders in their legal battle against publisher Krafton, ordering the reinstatement of CEO Ted Gill and extending the $250 million bonus period.

The decision was handed down on March 16 by Vice Chancellor Lori W. Will in the Delaware Chancery Court.

"Judgment is entered in favor of Fortis on its Phase One claims. Krafton breached the EPA by terminating the Key Employees without valid Cause and by improperly seizing operational control of Unknown Worlds."

Image: Subnautica 2 (via Unknown World)

So what does this mean in practice? Ted Gill is getting his CEO seat back, and with it, full operational authority over Subnautica 2's Early Access release.

According to the ruling, Krafton is also required to restore his access to the Steam platform and is prohibited from interfering with his authority over the launch. The July 2025 board resolution that led to Gill's firing has been declared ineffective by the court.

The backstory is that Krafton acquired Unknown Worlds back in 2021 for $500 million, with an additional earnout of up to $250 million available to the co-founders (Charlie Cleveland and Max McGuire—along with CEO Ted Gill) if the studio hit certain revenue targets by the end of 2025. That target was: if Unknown Worlds exceeds $69.8 million in revenue, Krafton must pay $3.12 for every additional dollar earned, up to the $250 million cap.

As Subnautica 2 was heading toward its Early Access launch last year, internal projections reportedly predicted that a successful August 2025 launch could result in over 1.67 million copies sold by Q4 2025. A base case scenario projected a $191.8 million earnout payment, while the best-case figure hit $242.2 million.

Those numbers, according to the lawsuit, made Krafton CEO Changhan Kim very uncomfortable. The judge found that Kim, who had personally led the Unknown Worlds acquisition, felt that Krafton had overpaid and feared that making the earnout payment would earn him a reputation as a "pushover."

This apparently set off a chain of events, including a month-long internal plan called "Project X," during which Kim consulted ChatGPT multiple times to figure out how to handle the messaging around the leadership change.

It all culminated in the firings of Gill, Cleveland, and McGuire in July 2025.

Krafton's stated reasons for the firings shifted over time. The publisher initially claimed the co-founders had failed to get Subnautica 2 ready for a timely launch. It later pivoted to arguing that they had been working on outside projects and attempted to take unauthorized materials before being let go.

The court rejected both of these arguments. As per the ruling, "Krafton's newly manufactured justifications for the terminations are pretextual."

On the subject of data downloads that Krafton had pointed to as misconduct, the court found that the employees had done so to "protect the studio's work product amid Krafton's takeover attempt. They kept the data confidential and promptly returned it."

The $250 million bonus period, which had originally been set to close at the end of 2025, has now been extended to September 15, 2026, with a possible further extension to March 15, 2027. That gives the studio a renewed window to hit the revenue thresholds needed to unlock the earnout.

As for Krafton, the company has responded to the ruling. "While we respectfully disagree with today's ruling, we are evaluating our options as we determine our path forward," the publisher told Kotaku. The company also emphasized that its "immediate focus remains unchanged: delivering the best possible game to Subnautica's fans."

It is worth noting that this ruling only covers Phase One of the litigation. Phase Two, which deals with potential monetary damages resulting from the firings, is still pending. The court will need to determine whether the co-founders are owed additional compensation beyond what has already been addressed.

For fans of the franchise, the more immediate question is when Subnautica 2 will actually release in Early Access. With Gill reinstated and in control of the launch decision, things could move quickly. However, given the development work done over the past several months under new leadership, some time may still be needed to get the build ready for players.