Krafton Settles Subnautica 2 Lawsuit | $250M Bonus Pool, Ted Gill Steps Down

The most bizarre, high-stakes corporate governance battle in recent gaming industry history has officially come to an end. Publisher Krafton, Inc. and its subsidiary Unknown Worlds Entertainment have issued a joint statement confirming a mutual legal settlement, dismissing all pending lawsuits between the South Korean publisher and the studio's founding leadership team.

As part of the agreement, Krafton has conceded on the heavily disputed $250 million earnout bonus tied to Subnautica 2. Unknown Worlds CEO Ted Gill, who was aggressively fired by Krafton last summer before winning a court-ordered reinstatement in March, has agreed to step down to clear the path for new management.

The Numbers That Forced Krafton's Hand

When Krafton initially ousted Gill alongside co-founders Charlie Cleveland and Max McGuire last summer, the publisher alleged leadership had neglected their duties and intentionally delayed production. The executives filed a sweeping counter-lawsuit claiming Krafton manufactured the firings to dodge the $250 million earnout established during Krafton's $500 million acquisition of Unknown Worlds in 2021.

Following court-ordered reinstatement of the founders in spring 2026, Subnautica 2 launched on Steam Early Access on May 14. It became an instant record-shattering blockbuster, making Krafton's legal position untenable.

The commercial performance immediately triggered the original acquisition milestones, dismantling Krafton's legal defense entirely and proving the development team had a massive hit on their hands all along.

A Restructured Payout | Entire Studio Included

The most surprising element of the settlement is who actually receives the $250 million. Under the original 2021 acquisition blueprint, the earnout was strictly earmarked for the top three executives and a small handful of legacy staff present at the time of buyout.

The settlement radically decentralizes that structure. The capital will now be distributed across the entire active staff of Unknown Worlds, including recent hires who joined well after the acquisition closed. According to Gill, engineering and design teams will be “compensated significantly more” than the original agreement ever outlined, with the $250 million distributed evenly over three annual installments alongside a fresh layer of long-term incentives tied to future live-service updates.

Both organizations have confirmed they will begin an immediate executive search for a new CEO sourced entirely from outside either company.

The ChatGPT Cautionary Tale | Project X Exposed

Beyond the financial resolution, the settlement closes a legal battle that exposed startling internal desperation within Krafton's executive suite. During Delaware Court of Chancery hearings in March, Vice-Chancellor Lori Will revealed that Krafton CEO Changhan Kim had viewed the $250 million earnout as a “bad deal” and actively consulted OpenAI's ChatGPT for advice on how to legally break the contract.

Following the AI chatbot's structural prompts, Kim established an internal corporate taskforce dubbed “Project X,” executing a sequence of bad-faith firings and artificial project delays designed to run out the earnout clock. The court heavily penalized Krafton for the AI-guided strategy, labeling the terminations an explicit breach of contract.

With the settlement signed, the Subnautica 2 saga concludes as both a major win for labor equity within independent development studios and, as corporate attorneys are widely calling it, the single most expensive ChatGPT consultation in history.