On August 15, 2024, Unknown Worlds Entertainment, the development studio behind the highly anticipated Subnautica 2, initiated legal proceedings against its former leadership team. The lawsuit alleges that the ousted executives systematically downloaded and retained extensive confidential company files in the days leading up to their abrupt termination in July.

This legal action represents the latest development in an ongoing corporate dispute that began when the former Subnautica 2 leadership team filed their own lawsuit against Krafton, the game's publisher. The initial complaint accused the publishing giant of deliberately delaying the project's release to 2026 to avoid paying substantial performance bonuses to the development team.

The legal confrontation emerged approximately one month after Krafton, as parent company of Unknown Worlds, terminated the three-person leadership team comprising Charlie Cleveland, Max McGuire, and Ted Gill. The dismissal occurred without prior warning on July 2, with Krafton subsequently appointing industry veteran Steve Papoutsis as the new CEO of Unknown Worlds. Papoutsis brings considerable experience from his previous roles as senior and executive producer of the Dead Space series and as CEO of Striking Distance Studios, another Krafton subsidiary.

Following Krafton's formal response to the initial lawsuit, Unknown Worlds has now filed counter-allegations against its former leadership. According to court documents filed in Delaware and corroborated by industry reports, the development studio accuses Cleveland, McGuire, and Gill of appropriating over 170,000 confidential company files allegedly downloaded immediately before their employment concluded.

The legal filing provides specific details regarding the alleged data appropriation, claiming that McGuire downloaded 99,902 files before his termination, while Cleveland accessed 72,140 files. Notably, the documents indicate that Cleveland ceased his download activities merely eight minutes before Unknown Worlds revoked his system access privileges. The company asserts that these downloads represent the most substantial data transfers initiated by the three executives since at least 2022.

The original lawsuit filed by the former executives contends that Krafton strategically delayed Subnautica 2's early access release to 2026 to avoid paying a $250 million bonus that would have been distributed among the development team for achieving specific early access milestones in 2025. By postponing the release timeline, the former leadership argues that Unknown Worlds would be unable to meet Krafton's established criteria, consequently forfeiting the substantial performance incentives.