South Korean publisher Krafton and its subsidiary Unknown Worlds Entertainment reached a mutual settlement on Wednesday, July 1, 2026, resolving a year-long legal dispute over employee bonuses and leadership control for the upcoming game Subnautica 2.
As reported by Bloomberg, the agreement dismisses all pending legal proceedings in the Delaware Court of Chancery.
The entire staff at Unknown Worlds will receive their multi-million dollar bonuses in three annual installments while CEO Ted Gill voluntarily steps down from his position.
"Krafton, Inc., Unknown Worlds Entertainment and Ted Gill, Charlie Cleveland, and Max McGuire have reached a mutual settlement and agreed to dismiss all pending legal proceedings," said Krafton, Inc.
The publisher confirmed the dismissal of the lawsuit, which was originally filed by Fortis Advisors, LLC on behalf of the former shareholder representatives.
Krafton noted that the development of the sequel remains the core focus moving forward.
"Unknown Worlds and Krafton are focused on supporting Subnautica 2, its Early Access journey to the full 1.0 release and the global community that has made the franchise so special.
Unknown Worlds will continue leading development, with Krafton providing support for the success of the game," said Krafton, Inc.
Leadership Change and Bonus Details
Following the settlement, outgoing CEO Ted Gill explained to Bloomberg that the studio required a fresh direction to sustain its future development milestones.
"New leadership is the best way for the studio to move forward," said Ted Gill.
Gill added that the resolution expanded the payout pool beyond the initial 2021 acquisition group to encompass all current employees who contributed to the game's commercial success.
According to Polygon, the staff will receive higher payouts than originally anticipated under the prior earn-out agreement structure.
The agreement also outlines ongoing rewards for the development team as the game continues to progress through its public early access phase.
"Further incentives," said Ted Gill.
The legal friction initially surfaced in July 2025 when former executive leadership expressed public frustration over Krafton delaying the early access rollout on Reddit.
"We know in our hearts that the game is ready for early access," said Charlie Cleveland, Co-Founder of Unknown Worlds.
Cleveland noted at the time that executive management had lost operational control over the product deployment pipeline due to parent company intervention.
"The current game release is out of our control," said Charlie Cleveland.
During the litigation, court documents revealed that Krafton chief executive Changhan Kim initially resisted the $250 million bonus milestone layout as internal metrics showed the game was on track to hit its goals.
Vice-Chancellor Lori Will of the Delaware Court of Chancery described the situation as a "bad deal" for Krafton.
The judicial ruling detailed that corporate leadership felt standard contractual clauses were disadvantageous to the parent firm, stating they had been "taken advantage of."
Internal legal warnings advised Krafton that the financial obligations remained binding even under specific termination strategies.
Attorneys warned management that attempting to block the payouts would trigger significant legal and corporate public relations vulnerabilities, citing "lawsuit and reputation risk."
Kim subsequently consulted an artificial intelligence chatbot regarding options to terminate the original agreement parameters, which the court noted was "difficult to cancel."
The court noted that an internal corporate unit was subsequently established following automated operational guidance.
The specialized internal task force sought to either alter the earn-out terms or initiate a complete corporate restructuring.
"The task force's mandate was to either negotiate a 'deal' on the earnout or execute a 'takeover' of Unknown Worlds," said Vice-Chancellor Will.
The court established that the publisher implemented the automated recommendations throughout the subsequent operational month. "Over the next month, Krafton followed most of ChatGPT's recommendations," said Will.
InvenGlobal reported that the formal withdrawal of the lawsuit occurred on June 30, closing the internal management dispute completely.
The publisher reiterated its commitment to supporting the game through its developmental roadmap following the official settlement confirmation.
Subnautica 2 has sold over 4 million copies since its May early access launch, and Unknown Worlds will continue to manage the project independently under new leadership.
"Unknown Worlds will continue leading development, with KRAFTON providing support to ensure the success of the game," said Krafton, Inc.
