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Medium reported severity

Delaware court finds Krafton fired three Unknown Worlds executives without valid cause in a takeover that followed its CEO's ChatGPT strategy

A Delaware Court of Chancery opinion of 16 March 2026 finds that in June 2025 the CEO of Krafton, after being warned that a dismissal with cause would not eliminate a contingent earnout obligation, consulted ChatGPT. The chatbot answered that the earnout would be difficult to cancel, suggested an internal task force (Project X) whose mandate was to negotiate a deal or execute a takeover of the studio, and prepared a "Response Strategy to a No-Deal Scenario" that recommended locking down the studio's Steam and console publishing rights and build-pipeline access. The court found that Krafton followed most of these recommendations over the next month: it locked the studio out of its Steam publishing rights, which severed the studio's practical ability to launch its game and forced the studio's CEO to the negotiating table, posted a message on the studio's websites, and on 1 July 2025 sent termination letters to the studio's two founders and its CEO. The court held that Krafton breached the acquisition agreement by terminating the three executives without valid Cause and by improperly seizing operational control, reinstated the studio's CEO and extended the earnout period by 258 days. The opinion records that the Krafton CEO had begun exploring options including firing the executives before consulting ChatGPT, and does not find that ChatGPT recommended the terminations. Krafton said it disagreed with the ruling. On 1 July 2026 Krafton announced a mutual settlement with the studio and the three executives dismissing all pending proceedings; IGN, citing Bloomberg, reported that the studio's CEO stepped down as part of it.

AI system
ChatGPT
OpenAI
Occurred
Jun 2025
Reported
16 March 2026
Event location
Unknown
What the AI did
Informed a human decision about the person
Reported harm
Professional Harm
Whose AI use
An institution’s AI use
Setting
Work
Evidence
AI involvement supported · Causal attribution unclear · 4 sources, 2 underlying accounts
13 claims: 10 documented, 3 reported. 7 open questions
People reported harmed
3 people

AI system as recorded: ChatGPT (OpenAI)

Reported harm

The court found three studio executives were terminated without valid Cause and had operational control taken from them in a campaign that followed most of a ChatGPT-prepared strategy; one was reinstated by court order in March 2026 and the dispute was settled in July 2026.

Outcome

Resolved

16 March 2026: the Delaware Court of Chancery (Phase One) held that Krafton breached the acquisition agreement, reinstated the studio's CEO with operational control, declared the 1 July 2025 board resolution ineffective to the extent it infringed that control, enjoined Krafton from impeding the early access launch, ordered Steam access restored and extended the base earnout Testing Period by 258 days to 15 September 2026; damages were reserved for Phase Two. Krafton told the Guardian it disagreed with the ruling and was evaluating its options. 1 July 2026: Krafton said in a statement to IGN, and in a regulatory filing reported by Yonhap via The Korea Times, that Krafton, Unknown Worlds and the three executives had reached a mutual settlement and agreed to dismiss all pending legal proceedings as of 30 June 2026. IGN, citing Bloomberg, reported that the studio's CEO stepped down as part of the settlement and that the studio's staff would receive their bonuses.

What remains unknown

  • The date of the CEO's first ChatGPT use is not given beyond the sequence in the opinion (a legal warning on 2 June 2025 followed by the ChatGPT consultation). The incident date is the month.
  • The content of the deleted ChatGPT chat is unknown.
  • Whether ChatGPT recommended or was asked about terminating the executives is not stated in the opinion; the opinion records that the Krafton CEO had explored firing them before consulting it.
  • Phase Two (damages and earnout impairment) was never decided: the parties settled in July 2026, and the settlement terms beyond dismissal of all proceedings are known only from IGN's account of a Bloomberg report.
  • Whether Krafton appealed the March 2026 opinion before the settlement is not stated in the inspected sources.
  • Where the executives lived and worked is not stated in the inspected passages; the Korea Times describes the studio as a U.S. game studio and the opinion as a California corporation, which does not locate the lockout or the terminations.
  • The end of the harmful series is not a single date: termination letters were sent on 1 July 2025 effective 31 July, and the court counted the studio CEO's ouster as lasting until 16 March 2026.

What the evidence supports

AI involvement: supported. Output: the court opinion finds that Krafton's CEO consulted ChatGPT after being warned that a dismissal with cause would not eliminate the earnout, that the chatbot answered the earnout would be difficult to cancel, that at ChatGPT's suggestion the CEO formed the Project X task force whose mandate was a deal or a takeover of the studio, and that ChatGPT prepared a "Response Strategy to a No-Deal Scenario" recommending, among other steps, locking down Steam and console publishing rights and build-pipeline access and a key summary of responses to deliver to the Key Employees. Use: the court finds that over the next month Krafton followed most of ChatGPT's recommendations and that, as ChatGPT recommended, it locked down the studio's Steam publishing rights. Consequence: the court finds the lockdown severed the studio's practical ability to launch its game and forced its CEO to the negotiating table, that the takeover and the 1 July 2025 terminations followed when negotiations stalled, and holds that Krafton breached the agreement by improperly seizing operational control from the Key Employees and terminating them without valid Cause. Limits: the strategy the opinion quotes does not list dismissing the executives, the CEO had explored firing them before consulting ChatGPT, and the first chat log was deleted, so the chatbot's first replies are known only through Slack messages.

13 claims: 10 documented, 3 reported. What the statuses mean

Documented On 16 March 2026 the Delaware Court of Chancery entered judgment that Krafton breached the acquisition agreement by terminating the three Key Employees without valid Cause and by improperly seizing operational control of the studio.

Causal attribution. Phase One judgment on the contract claims. The court reserves damages for a second phase and does not decide whether the earnout was wrongfully impaired.

Documented The court found that after the Head of Corporate Development at Krafton warned the CEO that a dismissal with cause would not eliminate the earnout obligation, the CEO turned to ChatGPT, and that the CEO told the Head of Corporate Development in a Slack message that ChatGPT answered the earnout would be difficult to cancel.

Causal attribution. Findings of fact drawn from Slack messages and trial testimony. The chat itself was deleted.

Documented The court found that ChatGPT prepared a "Response Strategy to a No-Deal Scenario" recommending, among other steps, preemptive public framing, locking down publishing rights and access to the build pipeline, legal defense materials and team retention, and that Krafton followed most of these recommendations over the next month.

Causal attribution. The opinion lists the strategy items and the steps Krafton took. The listed strategy does not include dismissing the executives. The dismissal decision is Krafton's.

Documented The court found that Krafton locked Unknown Worlds out of its Steam publishing rights, which the court found severed the studio's practical ability to launch its game, posted a message on the studio websites without the studio's involvement, and on 1 July 2025 sent termination letters citing a single ground.

Causal attribution. Court findings of fact. The opinion links the lockdown to ChatGPT's recommendation and does not state that ChatGPT recommended the July terminations.

Documented The court found Krafton's later justifications for the terminations (semi-retirement of two founders and data downloads) were pretextual.

Causal attribution. Judicial finding after an expedited trial. Krafton's arguments are its litigation positions.

Documented The court reinstated the CEO of Unknown Worlds, enjoined Krafton from impeding the studio CEO's authority over the game's early access launch, and extended the base earnout Testing Period by 258 days.

Causal attribution. Specific performance remedy. The court declined to return the two founders to their earlier roles.

Documented The CEO admitted at trial to deleting relevant ChatGPT logs, including the particular chat in which the earnout question was put to the chatbot.

Causal attribution. A limit on the record. It bears on what the chatbot said, not on the court's findings about the terminations.

Documented The court found that, at ChatGPT's suggestion, the Krafton CEO formed an internal task force, Project X, whose mandate was either to negotiate a deal on the earnout or to execute a takeover of Unknown Worlds.

Causal attribution. Finding of fact in the opinion, relayed by the Guardian and IGN. The task force's mandate is Krafton's; the opinion attributes only the suggestion to form it to ChatGPT.

Documented The court found that the Krafton CEO had begun exploring options, including firing the Key Employees, before the 2 June 2025 warning and the ChatGPT consultation that followed it.

Causal attribution. Contrary evidence on causation: the idea of dismissal preceded the chatbot consultation.

Documented The court found that ChatGPT's strategy also suggested a key summary of responses Krafton could deliver to the Key Employees, that Krafton's seizure of Steam and other systems forced the studio's CEO to the negotiating table, and that when negotiations stalled Krafton's Head of Strategy wrote on 27 June 2025 that it might be easier to just do a takeover, to which the Krafton CEO replied to set a date.

Causal attribution. Findings of fact from Slack messages and trial testimony. They connect the ChatGPT-recommended lockdown to the negotiations and the takeover decision; the takeover decision itself is the Krafton executives'.

Reported Krafton said in a statement to IGN that Krafton, Unknown Worlds and the three executives had reached a mutual settlement and agreed to dismiss all pending legal proceedings, and Yonhap, via The Korea Times, reported a Krafton regulatory filing on Wednesday 1 July 2026 saying the dispute was settled and all pending lawsuits withdrawn as of Tuesday 30 June 2026.

Causal attribution. Both outlets relay Krafton's own announcement (a statement to IGN and a regulatory filing), one origin. The settlement terms beyond dismissal are not published by Krafton.

  • ign.com(opens in new tab) supports · English
    have reached a mutual settlement and agreed to dismiss all pending legal proceedings,
  • koreatimes.co.kr(opens in new tab) supports · English
    Krafton said in a regulatory filing Wednesday that the company and the lead developers behind the globally popular Subnautica video game franchise decided to drop their court fight over controversial earn out bonuses.
  • koreatimes.co.kr(opens in new tab) supports · English
    officially settled the dispute and decided to withdraw all pending lawsuits as of Tuesday, the filing read.
Reported IGN, citing Bloomberg, reported that the studio's CEO stepped down as part of the settlement and that the studio's entire staff would receive their bonuses.

Causal attribution. Second-hand report (IGN relaying Bloomberg); Krafton's statement does not confirm these terms.

  • ign.com(opens in new tab) supports · English
    had stepped down, leaving the company to look for a new boss.
  • ign.com(opens in new tab) supports · English
    The entire staff of Subnautica 2 developer Unknown Worlds will get their bonuses after parent company Krafton reached a settlement with studio leadership.
Reported Krafton said in a statement after the ruling that it disagreed with the ruling and was evaluating its options.

Causal attribution. Krafton's litigation position as reported by the Guardian.

  • theguardian.com(opens in new tab) supports · English
    Krafton said in a statement that it disagreed with the ruling and was evaluating its options and remained focused on delivering the best possible game for fans.

Sources

4 sources inspected, from 2 underlying accounts. Sources that repeat one account do not corroborate each other.

How the sources were read, and where the events happened

Event countries: Unknown. Affected-person countries: Unknown. Court countries: United States.

The opinion is from the Delaware Court of Chancery (court country US). It describes Krafton as a South Korean company and the studio as a California corporation, and the Korea Times calls the studio a U.S. game studio; none of the inspected sources states where the executives were when locked out and terminated, so event and affected-person countries are left unknown rather than inferred from incorporation or headquarters.

Reviewed for publication 2026-10-10: The full Delaware Court of Chancery opinion was read for the ChatGPT passages, the termination chronology, the holding and the remedy; the Guardian's report of the ruling and the IGN and Korea Times/Yonhap reports of the July 2026 settlement were read in full. Claims drawn from the opinion are court findings and are documented; Krafton's statements and the settlement terms are reported and attributed. The AI output (the chatbot's strategy and task-force suggestion), Krafton's use of it (the Steam lockdown as ChatGPT recommended) and the consequence for the three executives (loss of operational control and termination found to be without valid Cause) are cited separately. The affected executives are described by role.

People described

The two founders and the CEO of the game studio Unknown Worlds, terminated by its parent company Krafton on 1 July 2025 and found by the court to have been dismissed without valid Cause

People reported harmed in this case

3 people

0 AI participants · 3 other people harmed

The opinion finds three Key Employees (two founders and the CEO) were terminated without valid Cause. Former shareholders represented by the plaintiff, studio staff and players are not counted.

Counted once within this case. The same person may appear in other cases. This count does not establish AI causation.

Tags

#informed-decision

Cite this case

Compiled per our published methodology: verification statuses, sourcing standards, and corrections process.

APA

NOPE. (2026). Delaware court finds Krafton fired three Unknown Worlds executives without valid cause in a takeover that followed its CEO's ChatGPT strategy. AI incidents. https://nope.net/incidents/2025-krafton-unknown-worlds-executives-terminated-after-chatgpt-takeover-strategy

BibTeX

@misc{2025_krafton_unknown_worlds_executives_terminated_after_chatgpt_takeover_strategy,
  title = {Delaware court finds Krafton fired three Unknown Worlds executives without valid cause in a takeover that followed its CEO's ChatGPT strategy},
  author = {NOPE},
  year = {2026},
  howpublished = {AI incidents},
  url = {https://nope.net/incidents/2025-krafton-unknown-worlds-executives-terminated-after-chatgpt-takeover-strategy}
}

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