Unknown Worlds Countersues Former Leaders Over Subnautica 2 Dispute

Subnautica 2 (Credit: Unknown Worlds / Krafton)

The ongoing Subnautica 2 legal battle has taken another dramatic turn as Unknown Worlds, the studio behind the franchise, has now filed a lawsuit against its former executives.

The studio is accusing co-founder Charlie Cleveland, CEO Ted Gill, and technical lead Max McGuire of “abandoning the company and its responsibilities,” breaching their contracts, and walking away with confidential files before their dismissal.

What makes this twist particularly notable is that the case was brought by Unknown Worlds itself, not its parent company, Krafton. The studio argues it was directly harmed by the actions of its leadership. “While Krafton is the parent company, the contracts, intellectual property, and confidential information at issue belong to Unknown Worlds.”

The back-and-forth began when the trio accused Krafton of deliberately delaying Subnautica 2 to avoid a $250 million earnout payout. Krafton fired back, insisting the sequel was “nowhere near ready for release” and that pushing it out early risked a situation similar to the troubled launch of Kerbal Space Program 2.

But this new lawsuit paints a different picture. According to court documents, Gill allegedly copied “a full and complete copy of his Unknown Worlds email account” just days before his dismissal. Cleveland is said to have downloaded more than 72,000 files from company drives, including design documents for Subnautica 2. The filing adds that McGuire “completed the trifecta of mischief” by pulling nearly 100,000 files, many linked to Moonbreaker, the studio’s shelved project.

The lawsuit also accuses the former executives of leaking information to the press to strengthen their case against Krafton, which the studio argues has caused reputational damage and could jeopardize the franchise’s future. Unknown Worlds says cease-and-desist letters were sent, but the former execs allegedly responded by denying any wrongdoing and even “threatening to delete the information themselves.”

Beyond the data dispute, the lawsuit also criticizes the former leaders’ commitment to the project. Cleveland, once the face of the franchise, reportedly “checked out” of development to pursue film interests, while McGuire stayed preoccupied with Moonbreaker. Gill, the complaint says, “could not overcome the complete abdication of the Subnautica 2 creative and technical leadership team.”

The studio is demanding the return of all materials, damages, legal fees, and full ownership of any creative work produced during the trio’s employment — including “movie scripts, movie footage, game design, game code, playtests, or other software development.”

For now, the battle over Subnautica 2 remains as much about corporate control and reputation as it does about the game itself. And with hearings not expected until later this year, fans may be left waiting even longer to see how this legal storm impacts the highly anticipated sequel.