Key Takeaways
- Charlie Cleveland has filed a lawsuit against Krafton, alleging wrongful removal and misrepresentation of earn-out bonuses.
- A $250 million bonus pool lies at the heart of the dispute, with Krafton claiming 90% was earmarked for former executives—claims Cleveland denies.
- Subnautica 2’s delay has sparked controversy, with former leadership asserting the game is ready and Krafton denying financial motives behind the timeline.
On July 10, 2025, Charlie Cleveland, co-founder of Unknown Worlds Entertainment, announced that he has filed a lawsuit against Krafton, the South Korean gaming giant that acquired the studio behind the Subnautica series. The legal action comes just days after Cleveland, along with fellow executives Ted Gill and Max McGuire, was abruptly removed from his leadership role on July 2 and replaced by former EA executive Steve Papoutsis.
Legal Battle Over Leadership and $250M Bonus Pool
Cleveland’s statement, made public via social media, accuses Krafton of unjust removal and misrepresenting facts about a massive bonus pool. The central point of contention revolves around an earn-out compensation of up to $250 million, which Krafton claimed had been disproportionately allocated to Cleveland, Gill, and McGuire—approximately 90% of it.
In response to this narrative, Cleveland strongly denied any wrongdoing, stating:
“The idea that we wanted to keep the bonuses for ourselves is false. We’ve always shared profits with our team—during our time leading Unknown Worlds and when we sold the studio.”
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The controversy has also spilled into Subnautica 2’s development. Rumors had been circulating that Krafton may be intentionally delaying the early access launch to avoid triggering performance-based payouts. During a recent internal town hall, new CEO Steve Papoutsis was directly asked whether this was true.
Cleveland and his former co-founders insisted the game is ready, asserting:
“We know in our souls that the game is ready for Early Access – that’s just how we roll.”
While no public evidence confirms the delay was compensation-driven, the timing of leadership changes and legal proceedings has fueled industry speculation.
Krafton Reiterates Commitment to Employees
In its official statement, Krafton defended its actions by emphasizing its intent to fairly reward all Unknown Worlds employees, not just top executives.
“We remain committed to ensuring the broader team receives appropriate compensation from the earn-out agreement,” the company said.
The details of Cleveland’s lawsuit have not yet been fully disclosed, but he stated they would “eventually become (at least mostly) public,” promising transparency to fans and supporters of the franchise.
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