Explosive Unknown Worlds lawsuit filing claims Krafton created secret task force to “execute a takeover”

The lawsuit brought by former Unknown Worlds executives against Krafton is due to be tried from today, November 17, and will be focused on the former Unknown Worlds leads demands to be reinstated.

In a pre-trial brief filed by Fortis Advisors and seen by GamesIndustry.biz and uploaded publicly by Game Developer, the plaintiffs allege that Krafton fired the founders and delayed the launch of Subnautica 2 to avoid paying a multi-million dollar earnout.

The founders’ lawyers claim Krafton first tried to persuade them to delay Subnautica 2’s launch “based on now-abandoned claims that the game was not ready for release.”

“When that failed, Krafton created a secret task force called ‘Project X’ whose mandate was simple: either make a ‘deal’ with the Founders on the ‘earnout’ or execute a ‘Take Over’ of Unknown Worlds,” the lawsuit claims. “When the Founders refused to accede to Krafton’s demands, Krafton pulled the trigger.”

Details of the legal complaint against Krafton, Inc. by the former leadership of Subnautica 2 developer Unknown Worlds became public in July. The complaint concerns a $250 million bonus payout tied to revenue targets for the 2025 Early Access release of Subnautica 2, which the former shareholders of Unknown Worlds Entertainment, represented by Fortis Advisors LLC, allege owners Krafton, Inc. sought to avoid paying out by delaying the game using “pressure tactics.”

In its defense, Krafton accused the three former leaders of then threatening to self-publish Subnautica 2, “releasing it without Krafton’s backing, marketing, promotion, or distribution.” This, Krafton claims, left it with “no choice but to terminate their employment,” along with allegations that Max McGuire, Ted Gill, and Charlie Cleveland downloaded tens of thousands of “company files” and emails in the lead up to these terminations. The founders strenuously deny this, and claim the publisher “chang[ed] its story mid-litigation about why it fired the founders and seized control over Unknown Worlds.”

Krafton then filed two further legal documents after the founders and former leadership team of Subnautica 2 developer Unknown Worlds successfully blocked Krafton’s request for a court-ordered protective order to force the founders to turn over their devices for a forensic inspection.

In this new filing, lawyers for the founders include Slack messages purportedly between Krafton CEO CH Kim and Unknown Worlds newly-appointed CFO Richard Yoon discussing a potential takeover.

“In the lead-up to this decision, Krafton CEO CH Kim had become frustrated with the contract Krafton signed to acquire Unknown Worlds. From his seat, it had become a bad deal for Krafton – one ‘under which [Krafton] can only be dragged around,'” the filing states.

Furthermore, the papers claim “Kim expressed his frustrations to Charlie Cleveland at a May 20 meeting in Los Angeles. He told Cleveland that paying the ‘earnout’ could cause ‘the value of the studio’ to ‘drop significantly,’ and that ‘he, as the person responsible for the investment, would have to take responsibility.’

“Kim later told a colleague that if Cleveland had ‘looked sorry’ when Kim told him this, he ‘wouldn’t have th[e] thought’ to take away the earnout.”

The filing also adds that Unknown Worlds’ playtest data, presented to Krafton in May, “showed that the game met players’ expectations,” “Krafton’s own internal expert declared that the planned 2025 release would be best (and that firing Ted Gill would result in a multi-year development delay),” and Maria Park, Krafton’s global head of corporate development, wrote “the game was ready for an August launch.”

It also suggests that “by contrast, Krafton’s corporate designee could not name a single Krafton employee who actually thought the game was unready for release”.

The filing adds that the court “should not countenance Krafton’s ever-shifting theories”.