Former Subnautica 2 Heads File Lawsuit Against Krafton Over $250 Million Bonus Controversy

By Elijah Gonzalez | July 11, 2025 | 11:30am

Video Games News subnautica 2

Former Subnautica 2 Heads File Lawsuit Against Krafton Over $250 Million Bonus Controversy

The drama around Subnautica 2 and the firing of its leads continues to escalate. A few hours after Subnautica 2 publisher Krafton alleged that the game’s previous leads were sacked because they “abandoned the responsibilities entrusted to them,” the ex-employees are filing a lawsuit against their former company.

Charlie Cleveland and Max McGuire, the co-founders of Subnautica studio Unknown Worlds, and the company’s former CEO, Ted Gill, are the ones suing. “We’ve now filed a lawsuit against Krafton: the details should eventually become (at least mostly) public – you all deserve the full story.” Cleveland wrote in a post on Reddit. “Suing a multi-billion dollar company in a painful, public and possibly protracted way was certainly not on my bucket list. But this needs to be made right. Subnautica has been my life’s work and I would never willingly abandon it or the amazing team that has poured their hearts into it.”

On July 2, Krafton put out a statement that Cleveland, McGuire, and Gill were let go by the company. Steve Papoutsis, the former chief development officer at Striking Distance Studios (Callisto Protocol), took over as CEO. Cleveland described the event as a “shock” in a post on his website, and explained that he and the other ousted leadership believed that Subnautica 2 was ready for its early access release, implying this was part of the reason for their departure.

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Then, on Wednesday, Bloomberg released a provocative report that highlighted how Krafton was due to pay Unknown Worlds a whopping $250 million bonus as part of the studio’s acquisition deal if the company was able to hit certain revenue targets by the end of 2025. The issue is that Krafton was also reportedly delaying the release of Subnautica 2 until the following year, making it more difficult for them to hit these goals. During an Unknown Worlds town hall, employees allegedly asked their new CEO, Papoutsis, if Krafton had postponed their game to ensure they wouldn’t be able to hit their bonus target. The studio’s former leadership had apparently promised employees that they would share the potential $250 million payout, resulting in bonuses that could have ranged from hundreds of thousands to millions of dollars.

Yesterday, Krafton issued a surprisingly blunt statement, accusing Cleveland, McGuire, and Gill of negligent leadership and implying that they planned on holding onto 90% of the $250 million bonus for themselves.

“Regrettably, the former leadership abandoned the responsibilities entrusted to them. Subnautica 2 was originally planned for an Early Access launch in early 2024, but the timeline has since been significantly delayed,” the statement reads. “KRAFTON made multiple requests to Charlie and Max to resume their roles as Game Director and Technical Director, respectively, but both declined to do so. In particular, following the failure of Moonbreaker, KRAFTON asked Charlie to devote himself to the development of Subnautica 2. However, instead of participating in the game development, he chose to focus on a personal film project.”

While the exact details of Cleveland, McGuire, and Gill’s lawsuit remain to be seen, it will undoubtedly take time to sort out the true sequence of events here (assuming the lawsuit isn’t settled behind closed doors).