Key Takeaways
1. Unknown Worlds Entertainment is suing its co-founders for neglecting their roles and misusing sensitive company information.
2. The lawsuit, filed on August 15, 2025, claims the founders’ disengagement harmed the development of Subnautica 2 and its release was rushed for financial gain.
3. Accusations include the founders neglecting their responsibilities and causing significant delays in the game’s development.
4. The founders are also accused of stealing confidential data before leaving the company, with large file downloads noted just before their access was cut off.
5. The legal action follows the founders’ termination on July 1, 2025, after Krafton’s acquisition of Unknown Worlds in 2021.
The team behind Subnautica, Unknown Worlds Entertainment, is taking legal action against its co-founders, Charlie Cleveland, Ted Gill, and Max McGuire. They claim that the founders neglected their roles, misused sensitive company information, and rushed the launch of Subnautica 2 for a big payout.
Details of the Lawsuit
The lawsuit spans 74 pages and was submitted to the Delaware Court of Chancery on August 15, 2025. It details how the founders’ disengagement negatively impacted the development of Subnautica 2 and jeopardized the integrity of the game series.
This legal action occurs after the trio was let go on July 1, 2025, and is linked to Krafton’s acquisition of Unknown Worlds in 2021 for $500 million. There was also a possible additional $250 million if the studio met certain revenue goals by 2025.
Allegations Against the Founders
The lawsuit states that McGuire, Gill, and Cleveland were entitled to 90% of the $250 million, with their bonuses connected to the game’s successful development and release. However, their actions reportedly caused delays and limited progress.
Further accusations in the suit claim that the executives “largely neglected” their responsibilities as creative and technical leads. Cleveland, for example, turned his attention to filmmaking by 2023, changing his LinkedIn to reflect a “part-time” status. By 2024, he had completely stepped down from all creative leadership roles, with internal complaints citing a lack of direction as early as 2022.
Gill is criticized for not addressing the total abandonment of leadership in both creative and technical aspects, allowing the studio to drift aimlessly while knowing the ongoing problems at Unknown Worlds.
Project Shifts and Delays
It has been reported that McGuire focused on his passion project, Moonbreaker, a turn-based digital miniatures game that ultimately did not succeed commercially in February 2024. He ceased all technical participation in Subnautica 2.
Due to their alleged actions, the development of Subnautica 2 fell years behind schedule. Internal reviews by Krafton in 2025 described the game’s current builds as “unready” and lacking essential gameplay features. Consequently, the game faced three delays, and its scope was downgraded from a fully-prepared Early Access to merely a digital sandbox.
Misappropriation of Data
In addition to these claims, Unknown Worlds accuses the founders of stealing confidential information as they departed from the studio. Between early June and July 2025, McGuire reportedly downloaded almost 100,000 files, including many related to Moonbreaker, while Cleveland downloaded about 72,000 files just eight minutes before his access was cut off.
Gill had exported his entire company email account two times, which triggered alerts from the IT department. These downloads were the largest undertaken by each of the three founders since at least 2022.
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