Krafton's CEO Used ChatGPT to Scheme His Way Out of a $250 Million Payout. A Judge Just Destroyed Him.

The CEO of one of the biggest gaming publishers in the world just got caught using ChatGPT to plan a corporate takeover of a beloved indie studio. And then a Delaware judge tore the entire thing apart in a ruling that reads like a courtroom thriller.

I don't even know where to start with this one.

Krafton. The company behind PUBG. The company that bought Unknown Worlds, the creators of Subnautica, for $500 million back in 2021. The company that recently declared itself an "AI First" company. These guys just had one of the most embarrassing weeks in recent gaming industry memory, and I need to walk you through all of it. Because it is wild.

The Deal That Started It All

Here's the setup. In 2021, Krafton acquired Unknown Worlds Entertainment for $500 million upfront. But that wasn't the whole deal. There was also a potential $250 million earnout built into the agreement. That means if Subnautica 2 hit certain revenue targets after release, the studio's founders, Charlie Cleveland, Max McGuire, and CEO Ted Gill, would earn an additional $250 million.

And here's the thing. The deal also included a contractual guarantee that those founders would keep operational control of the studio. They could only be removed for cause. That's important. Remember that.

For a while, things seemed fine. The Unknown Worlds team was working on Subnautica 2, the game was progressing, and internal projections showed it was on track to trigger that earnout. Everything was moving in the right direction.

And that's when things got ugly.

"I Feel Taken Advantage Of"

According to the court ruling, Krafton CEO Changhan Kim started to feel like the Unknown Worlds deal was too generous. He felt like paying out the $250 million earnout would make him look like a "pushover." Let that sink in. The CEO of a multi-billion dollar gaming company was worried about looking soft for honoring a contract that he signed.

By May 2025, Kim was openly complaining that the Subnautica 2 earnout was a "bad deal." His own head of corporate development, Maria Park, pushed back. She told him the game's build wasn't "in such a bad shape" and that trying to delay the Early Access release could become a "debatable" issue in court. Basically, his own people were telling him this was a bad idea.

So what did Kim do? Did he listen to his legal team? Did he listen to his finance team? Did he listen to the corporate development lead who was telling him to proceed with the launch?

No.

He asked ChatGPT.

The ChatGPT Takeover Plan

I'm going to say that again as clearly as possible. The CEO of Krafton, a publicly traded gaming conglomerate, went to ChatGPT for advice on how to avoid paying a quarter of a billion dollars to the founders of one of the most beloved indie studios in gaming.

That is just insane to me.

And he didn't just casually browse. He used the responses as the foundation for an entire corporate strategy. According to the court documents, ChatGPT's generated "key summary of responses" became the blueprint for what Krafton internally called "Project X." That's not me being dramatic. That was the actual name. Project X.

The plan, as advised by a large language model and adopted by a real human CEO, had three pillars. First, prepare "preemptive framing" around protecting product quality and fan trust. Translation? Manufacture a narrative that the game wasn't ready so they could justify a delay. Second, "secure control points" by locking down publishing rights on Steam and consoles. In other words, cut the studio off from its own game. Third, prepare "systemic materials for legal defense." Because they knew from the jump that this was going to end in a lawsuit.

And you know what makes this entire thing that much more insulting? Kim later tried to delete his ChatGPT conversations. When asked about it under oath, he said he deleted them because he learned that OpenAI could use company information for training purposes. That's the excuse. Not that the conversations were incriminating. Not that they revealed a scheme to cheat people out of hundreds of millions of dollars. No, he was worried about AI data privacy.

The Firings

So after building this ChatGPT-fueled plan, Krafton made its move. They locked Unknown Worlds out of its own publishing platform. They fired Cleveland, McGuire, and Gill. They posted critical messages on the studio's website. The whole thing happened fast and it happened deliberately.

Krafton's official justification was that Cleveland and McGuire had "absent" roles at the company and that all three were rushing the Subnautica 2 Early Access launch just to secure their payout.

But here's where it gets ugly for Krafton. The court found that Cleveland and McGuire had indeed stepped back from day-to-day leadership, but Krafton already knew that and was fine with it. Both founders had voluntarily reduced their salaries. Krafton's own head of corporate development told Gill the company had "no concerns" about the arrangement. This wasn't a secret. This wasn't some revelation that justified termination. This was something everybody agreed to.

As for the data theft accusation? The court found that Cleveland and McGuire were downloading files to protect the studio's work product because Krafton was actively trying to take the place over. They kept the data confidential and returned it. That's it.

Delaware Vice Chancellor Lori Will didn't mince words. She called Krafton's justifications for the terminations "pretextual." That's legal language for "you made this up."

The Ruling

The court ordered Krafton to reinstate Ted Gill as CEO of Unknown Worlds with "full operational authority." That means Gill now has final say on the release date of Subnautica 2. The same release date that Krafton was trying to delay to avoid triggering the earnout.

The court also extended the earnout period by the duration of Gill's time away from the studio. So Krafton's scheme to run out the clock didn't just fail. It backfired.

The question of whether Krafton's actions "wrongfully impaired" the earnout and whether additional damages are owed hasn't been resolved yet. That's coming in Phase Two. But Phase One is a full-blown repudiation of everything Krafton tried to do.

Krafton's official response? They "respectfully disagree" with the ruling and are evaluating their options. They also said their "immediate focus remains unchanged: delivering the best possible game to Subnautica's fans."

I just don't get it, man. You get caught using ChatGPT to orchestrate a scheme to cheat people out of their contractually agreed-upon earnings, a judge calls your entire defense pretextual, and your response is "we respectfully disagree." These guys think we have amnesia.

And Then They Partnered With a Missile Manufacturer

As if the lawsuit wasn't enough, let me tell you what Krafton did days before losing this case.

On March 13, Krafton announced a $1 billion strategic partnership with Hanwha Aerospace. If you're not familiar with Hanwha, they're a South Korean multinational that manufactures, among other things, the K9 self-propelled howitzer, precision-guided munitions, and multiple rocket launcher systems. They build weapons. Real ones.

The deal is structured around what Krafton calls "physical AI." Their plan is to leverage their experience running large-scale game simulations to help train AI for defense applications. And CEO Kim said he expects the partnership to produce "a global defense technology company like Anduril." That's the military contractor founded by Palmer Luckey, the Oculus guy.

The PUBG maker wants to be a defense contractor. That's where we're at right now.

Now to translate that into normal human language. A video game company that just got demolished in court for using ChatGPT to plan a corporate takeover is now partnering with an arms manufacturer to build autonomous military AI. While still claiming to be focused on "delivering the best possible game to Subnautica's fans."

That tells you everything you need to know about where Krafton's priorities actually are.

The Pattern Nobody Should Ignore

And look, if this was an isolated incident, maybe you could chalk it up to one bad decision. But it's not isolated. Krafton has a pattern.

Last Epoch. Remember when Krafton acquired Eleventh Hour Games and the developers told the community that Krafton "doesn't want to direct the game, monetization, hiring, or anything"? That they had "ultimate authority" but didn't intend to use it? Within months, Last Epoch announced paid Paradox Classes behind a paywall, breaking a promise the studio had maintained since their Kickstarter in 2018 that all future gameplay content would be free. The game's Steam reviews dropped to "Mixed." Players called it out immediately.

The Subnautica 2 ruling didn't cause that. But it confirmed the logic behind the concern. When Krafton acquires a studio, success becomes a liability. The better the game does, the more Krafton has to pay out. And if this lawsuit proves anything, it's that these guys will go to extraordinary, ChatGPT-fueled lengths to avoid sharing that success.

What This Really Means

Here's the bigger picture.

A CEO of a publicly traded gaming company ignored the advice of his own legal, finance, and corporate teams. He turned to a chatbot for strategic guidance instead. He used that chatbot's output to build a task force designed to strip contractual rights from the people who built one of gaming's most beloved franchises. He got caught. He got sued. And a court said, in no uncertain terms, that the whole thing was manufactured.

And this is the same company that declared itself "AI First." You can't make this up.

Look, I'll be honest with you. This story makes me angry, but not just because of the scheme. It makes me angry because the people who built Subnautica. The people who created something that millions of players love. Those people almost got robbed of what they were promised, by a guy who thought a chatbot knew better than his own team.

Cleveland and McGuire weren't rehired. The court said reinstating Gill was enough to "vindicate the sellers' operational rights." But there's still Phase Two coming, where the court will decide if Krafton owes damages for what they did. I'll be watching that closely.

In the meantime, Subnautica 2 is expected to hit Early Access in May 2026. Ted Gill is back in charge. And Krafton just learned that ChatGPT is not a lawyer. Should of used Claude.

We've seen this story before. A company gets too big, starts treating contracts like suggestions, and learns the hard way that courts don't care how important you think you are. The only difference this time is that the scheme was literally planned by a chatbot.

And somehow, yet again, the gaming industry finds a new way to embarrass itself.

We'll see how Phase Two plays out. But if I'm a developer thinking about signing a deal with Krafton right now? I'd be reading this ruling very, very carefully.