The messy, year-long legal battle between Korean game publisher Krafton and indie developer Unknown Worlds Entertainment has finally come to an end. Krafton will pay out a massive $250 million bonus to all current Unknown Worlds employees as part of a settlement, and the studio's CEO Ted Gill — who was fired, reinstated by court order, and successfully shipped Subnautica 2 — is now stepping down voluntarily.
Bloomberg first reported the settlement, which Krafton confirmed in a regulatory filing. As of July 1, both companies have withdrawn all pending lawsuits and agreed to move forward together.
Timeline of Events
| Date | Event |
|---|---|
| October 2021 | Krafton acquires Unknown Worlds to diversify beyond PUBG |
| Summer 2025 | Krafton fires CEO Ted Gill and co-founders Charlie Cleveland & Max McGuire |
| Summer 2025 | Fired execs file lawsuit in Delaware Court of Chancery, alleging $250M bonus avoidance |
| March 2026 | US court orders Krafton to reinstate Ted Gill as CEO |
| March 2026 | Krafton's CEO revealed to have used ChatGPT for legal advice |
| May 14, 2026 | Subnautica 2 launches in Early Access under Gill's leadership |
| Post-May 2026 | Subnautica 2 sells over 4 million copies |
| July 1, 2026 | Krafton and Unknown Worlds reach settlement; all lawsuits dropped |
| July 1, 2026 | Ted Gill steps down as CEO; search for external successor begins |
Background: A $250 Million Bonus Clause
When Krafton acquired Unknown Worlds in October 2021, the deal included a lucrative earn-out clause: if Subnautica 2 hit certain sales milestones within a defined window, the studio's leadership and employees would receive a $250 million bonus.
Then, in the summer of 2025, Krafton fired CEO Ted Gill and co-founders Charlie Cleveland and Max McGuire, citing "lack of leadership and development delays." Shortly after, Krafton also delayed the Early Access launch of Subnautica 2.
The fired executives fought back. They filed a lawsuit in the Delaware Court of Chancery, alleging that Krafton intentionally delayed the game and used "pressure tactics" to avoid paying out the massive bonus — essentially accusing Krafton of manufacturing reasons to void the earn-out clause.
The Legal Drama: A Court Reversal and a ChatGPT Twist
The lawsuit produced some remarkable moments. In March 2026, a US judge sided with Unknown Worlds and ordered Krafton to reinstate Ted Gill as CEO, handing control of Subnautica 2's launch back to the man who had been fired to prevent it.
The case also produced one of the more memorable corporate missteps of the year: it was revealed during the proceedings that Krafton's CEO had turned to ChatGPT for legal advice in this dispute. The result of relying on a large language model to navigate a $250 million lawsuit was exactly as you'd expect — the court ruled against Krafton.
Settlement Terms
| Item | Details |
|---|---|
| Bonus payment | Krafton pays bonus to all current Unknown Worlds employees |
| Payment schedule | 3 annual installments |
| Eligibility expanded | Previously: 2021 acquisition employees only → Now: all current staff |
| CEO | Ted Gill steps down voluntarily as part of the settlement |
| Lawsuits | All pending lawsuits withdrawn by both parties |
| Leadership | Both companies jointly searching for external candidate as new CEO |
One particularly notable aspect of the settlement is the expanded eligibility. Under the original acquisition agreement, only employees who were at Unknown Worlds during the 2021 Krafton acquisition would have received the bonus. The new settlement extends bonuses to every current employee at the studio — a significant win for newer staff who were otherwise left out.
What Each Side Said
Ted Gill, outgoing CEO of Unknown Worlds (to Bloomberg):
""New leadership is the best way for the studio to move forward."
He added that he "mutually agreed to part ways" with the studio, framing the departure as a collaborative decision rather than a forced exit.
Krafton (official statement to IGN):
""Krafton and Unknown Worlds are focusing on the development and official launch of Subnautica 2, putting fan experience as our utmost priority. Going forward, Unknown Worlds will continue to lead the development, while Krafton will continue to provide support necessary for the game's success."
Krafton described the resolution as "a mutual settlement" with Gill, McGuire, and Cleveland.
The Game at the Center of It All
Despite all the legal chaos surrounding its launch, Subnautica 2 itself is a genuine hit.
| Metric | Data | |
|---|---|---|
| Units sold | 4 million+ (since May 14 Early Access launch) | |
| Steam rating (overall) | Very Positive — 93% of 68,039 reviews | |
| Steam rating (recent) | Very Positive — 90% of 11,063 reviews | |
| Release date | May 14, 2026 (Early Access) | |
| Genre | Underwater survival adventure (solo or up to 4-player co-op) | |
| Platforms | PC (Steam), Xbox Series X\ | S |
| Languages | English + 10 more, including Korean |
The original Subnautica (2018) and Subnautica: Below Zero (2021) each sold millions of copies, making the franchise one of the most beloved in the survival genre. Subnautica 2's strong sales — 4 million units just weeks into Early Access — are exactly what triggered the bonus clause. In other words, the game's success is precisely what made the legal settlement possible.
Community Reaction
The gaming community has had a lot to say about this one.
Positive takes:
- ▶"The devs deserve every penny. Glad this is finally settled."
- ▶"Subnautica 2 selling like crazy directly led to the devs getting paid. Poetic."
- ▶"Krafton lost in court because they got lazy and asked ChatGPT instead of a real lawyer. You love to see it."
Bittersweet takes:
- ▶"Ted Gill saved Subnautica 2 and now he has to leave as part of the deal. That's rough."
- ▶"Three annual installments is a convenient way to delay the actual payout again..."
- ▶"The ChatGPT thing will never not be funny. A billion-dollar company."
The ChatGPT legal advice revelation has become a running joke across Reddit, Twitter/X, and gaming forums, cited frequently as a cautionary tale about over-reliance on AI in high-stakes professional settings.
GamePeak Summary
| Topic | Key Point |
|---|---|
| Outcome | Full settlement reached; all lawsuits dropped |
| Bonus | $250 million paid in 3 annual installments to all current staff |
| CEO | Ted Gill exits; outside search underway |
| Game status | 4M copies sold, 93% Very Positive on Steam |
| Precedent | Courts will enforce earn-out bonus clauses in acquisition deals |
This settlement sets a meaningful precedent for the game industry: publishers cannot simply fire executives and delay launches to void contractual bonus obligations. Subnautica 2 will continue its Early Access journey with ongoing updates — new biomes, creatures, and narrative content — as it builds toward a full 1.0 release. Who leads that charge under a new CEO remains the next big question to watch.