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KRAFTON Acquisition and Controversy
May 3, 2026 at 08:20 AM
Updated stale post-trial status with the March 18, 2026 ruling and Early Access window confirmation
In October 2021, South Korean publisher KRAFTON, Inc. (the company behind PUBG: Battlegrounds) announced the acquisition of Unknown Worlds Entertainment. The deal closed in December 2021 for a total package of up to $750 million, $500 million upfront plus up to $250 million in performance-based earnout payments tied to Subnautica 2's release milestones, due by June 2026.
The founders intended to distribute the earnout among approximately 100 employees, with payouts potentially ranging from hundreds of thousands to seven figures per person.
KRAFTON was founded in 2007 as Bluehole by Chang Byung-gyu in Seoul, South Korea. It rebranded in November 2018 as a holding company. CEO Changhan Kim (Kim Chang-han) took the role in 2020 after leading the creation of PUBG: Battlegrounds. The company went public on the Korea Exchange in August 2021, raising $3.8 billion. South Korea's largest IPO in a decade. Subsidiaries include PUBG Studios, Striking Distance Studios, and Unknown Worlds.
On July 2, 2025, KRAFTON removed co-founders Charlie Cleveland and Max McGuire, along with CEO Ted Gill, replacing them with Steve Papoutsis (previously CEO of Striking Distance Studios). KRAFTON stated it had implemented "regular milestones" and "clearly defined metrics and targets" and sought to keep the founders involved, but CEO Kim Chang-han later testified the founders had "effectively stopped working" on Subnautica 2 as of May 2025.
Court filings allege that CEO Kim established a secret internal task force called "Project X" with two objectives: (1) negotiate a deal with the founders on the earnout, and (2) execute a takeover of Unknown Worlds if negotiation failed. Slack messages between Kim and CFO Richard Yoon discussed takeover prospects. Kim allegedly viewed the earnout as "a threat to Kim's job" due to his 2026 contract renewal, stating the payout would cause "the value of the studio" to "drop significantly."
The pre-trial brief alleges that Kim "turned to artificial intelligence to help him brainstorm ways to avoid paying the earnout." In a June 2, 2025 message to an executive named Maria Park, Kim included a ChatGPT link and wrote: "Now, ChatGPT [is] start[ing] to answer that it is difficult to cancel the earnout." During trial testimony, Kim confirmed he "actually searched on ChatGPT to get faster answers." KRAFTON did not produce the ChatGPT conversation logs; a footnote states they "no longer exist."
In July 2025, Fortis Advisors LLC (representing the former shareholders) filed a 58-page lawsuit in Delaware Chancery Court (Case No. 2025-0805-LWW, before Vice Chancellor Lori W. Will). The complaint alleges KRAFTON deliberately sabotaged the game's development to avoid the $250 million earnout.
Specific allegations include:
Pulling marketing materials and refusing partnership commitments
Halting vendor payments affecting promotional support
Withdrawing localization, analytics, server infrastructure, and legal support
Instructing employees to stop "all creative tasks" related to the title
Characterizing the game as unfinished despite positive playtest data
A KRAFTON executive allegedly attempted to negotiate a lower earnout with CEO Gill on June 18, 2025
KRAFTON counter-sued in August 2025, alleging the founders "abandoned the studio and took confidential information." According to KRAFTON's filings, the founders downloaded over 170,000 files upon their departure: McGuire allegedly took approximately 100,000 files (including hundreds related to the game Moonbreaker), Cleveland downloaded roughly 72,000 files eight minutes before his access was revoked, and Gill exported his entire company email account twice, triggering IT alerts.
A three-day trial took place November 17-19, 2025, producing an 891-page transcript. KRAFTON's CFO Richard Yoon reportedly could not name a single KRAFTON employee who actually thought the game was unready for its planned release. CEO Kim testified: "There wouldn't be any deal" if he had known Cleveland wanted to stop making games. He expressed concerns about reinstating the founders, citing broken trust.
An internal creative director had recommended August 2025 as the Early Access launch date. The earnout was forecast at $191 million in the May 2025 base-case estimate.
Post-trial arguments were held January 9, 2026. On March 18, 2026, the court reinstated Ted Gill, and Unknown Worlds confirmed the Early Access release window as May 2026. The plaintiffs demand full reinstatement, payment of the complete $250 million earnout, and additional damages for reputational harm and lost income. KRAFTON has stated it is "nonsense" for the founders to return.
The Early Access launch, originally planned for 2025, was pushed to 2026. Leaked milestone documents (confirmed authentic by KRAFTON) revealed significant content cuts from the original scope. The community reacted with boycott calls on Reddit, though Steam wishlist numbers continued to climb.
