A US court has ordered South Korean gaming giant Krafton to reverse the firing of Unknown Worlds Entertainment’s leadership after discovering the company’s CEO used ChatGPT to orchestrate their removal. The goal? Avoiding a $250 million earnout payment tied to the studio behind Subnautica. The story, as reported by Hacker News, reads like a corporate thriller with an AI twist.
Here’s what happened. Krafton acquired Unknown Worlds for $500 million in 2021. The deal included a key protection: the studio would stay independent, its co-founders Charlie Cleveland and Max McGuire along with CEO Ted Gill would keep operational control, and they could only be fired for cause. If the studio hit certain performance targets, Krafton owed them up to $250 million more.
📊 The earnout was about to trigger
As Subnautica 2 ramped up toward release last year, internal projections showed Unknown Worlds would hit those targets. Krafton CEO Changhan Kim reportedly considered the original deal a “bad deal” and felt “taken advantage of,” according to the ruling by Delaware Vice-Chancellor Lori Will.
Kim’s own legal team warned him: the earnout would still need to be paid even if leadership was fired for cause, and any action would expose Krafton to “lawsuit and reputation risk.”
So Kim turned to ChatGPT.
🤖 “Project X” was born from a chatbot session
ChatGPT initially told Kim the earnout would be “difficult to cancel.” But the AI didn’t stop there. It suggested forming an internal task force. Kim followed that advice and created what was internally dubbed “Project X.”
The task force’s mission, as stated in the court ruling: either negotiate a deal on the earnout or execute a “Take Over” of Unknown Worlds. ChatGPT also recommended specific actions, including a communications strategy focused on “fan trust,” securing publishing rights over Subnautica 2, and preparing “systematic material of legal defense.”
“Over the next month, Krafton followed most of ChatGPT’s recommendations,” Vice-Chancellor Will wrote.
When the studio’s leadership refused to renegotiate, Krafton fired them. The stated reason? Allegations that Cleveland, McGuire, and Gill had been deceptive about how much time they were spending at the studio. The judge rejected that claim.
⚖️ The court stepped in
Vice-Chancellor Will ordered operational control returned to Gill and extended the period in which earnout criteria could be met. Krafton said it disagrees with the ruling and is “evaluating its options.”
What stands out here isn’t just the corporate maneuvering. It’s the fact that a publicly traded company’s CEO used a consumer AI chatbot to strategize around a contractual obligation worth a quarter of a billion dollars, then followed that advice almost to the letter, and it all ended up as evidence in a court ruling.
This case raises a question every executive should be thinking about: when you use ChatGPT for strategic business decisions, those conversations can become discoverable evidence. The AI doesn’t have attorney-client privilege. It doesn’t understand your legal obligations. And it will cheerfully help you build a plan that a judge later tears apart in a published opinion.
Krafton says it remains focused on delivering the best possible Subnautica sequel and is working “tirelessly” to prepare it for early access. Attorneys for the Unknown Worlds leadership did not respond to requests for comment.
The full details of the ruling are available through the original source coverage.