Shocking Win Against Krafton With Ted Gill Comeback To Subnautica 2

There has been a major update in the legal fight between Unknown Worlds and publisher Krafton.

About nine months after Ted Gill was ousted as CEO and lost control over Subnautica 2, a judge has ordered that he be reinstated as CEO of Unknown Worlds. The ruling also restores Gill’s authority over Subnautica 2’s early access release plans, meaning Krafton cannot block him from moving forward with the game’s launch when he deems it appropriate.

“Judgment is entered in favor of Fortis [Advisors],” Vice Chancellor Lori W. Will wrote in the decision handed down in Delaware Chancery Court on March 16. “Krafton breached the EPA by terminating the Key Employees without valid cause and by inappropriately seizing operational control of Unknown Worlds.”

Court Rejects Krafton’s Claims

The judge also extended the period in which the team can still pursue the $250 million earnout tied to the studio’s sale to Krafton. Charlie Cleveland and Max McGuire remain eligible for performance-based payouts through Sept. 15, 2026, and the ruling notes they have a contractual right to seek a further extension to March 15, 2027.

Krafton had argued at different points that the co-founders were responsible for Subnautica 2 not being ready for launch. Later, the publisher shifted to arguing that the founders had knowingly been working on side projects and had downloaded unauthorized company materials before they were fired. The court rejected both arguments.

“Krafton’s newly manufactured justifications for the terminations are pretextual,” the decision reads. The court added that Cleveland and McGuire had taken on more limited roles, but that arrangement was already known to and accepted by Krafton. As for the downloads, the court found that the former employees were acting to protect the studio’s work product during Krafton’s takeover attempt, kept the data confidential, and promptly returned it.

Why The Earnout Mattered

If you remember how this all started, Krafton acquired Unknown Worlds in 2021 for roughly $500 million, with up to $250 million more in earnout payments if certain revenue targets were met. According to the court, the earnout formula was steep: once Subnautica 2 passed a revenue threshold of $69.8 million, they would owe $3.12 for each additional dollar of revenue, up to the $250 million cap.

That number became a major issue during a milestone review in May 2025, when Subnautica 2 was still expected to launch in early access in 2025. The court wrote that the publisher’s own models predicted a successful launch could trigger a massive payout, with internal scenarios estimating a payment between about $191.8 million and $242.2 million. The judge said those figures caught the attention of Krafton CEO Changhan Kim, who believed they had overpaid for the studio and worried that making the earnout payment would make him look like a “pushover.”

ChatGPT And Project X

According to the ruling, Krafton then began looking for ways to avoid the earnout and eventually landed on firing the founders for cause. That effort became part of what the court described as “Project X,” which included consulting ChatGPT multiple times for help crafting messaging around the leadership shake-up and the public response. The judge found that the publisher’s actions amounted to a breach of contract.

Now the big question is when Subnautica 2 will actually release and whether it will still sell well enough to hit that earnout threshold. That part of the lawsuit is not resolved yet. The court’s Phase One ruling dealt with the firings and operational control, while Phase Two will address damages and the remaining earnout issues.

Krafton Responds To Ruling

“Krafton puts players at the heart of every decision, and that will never change,” the publisher told Kotaku in an emailed statement. The company said it remains focused on strengthening the game and preparing it for an early access release while evaluating its legal options. Krafton also said the ruling does not resolve the former executives’ damages claims or the earnout dispute, with further litigation still pending.