What Happened to Krafton CEO's ChatGPT Bonus Scandal?

The 'Krafton CEO's ChatGPT Bonus Scandal' centers on a contentious legal battle between South Korean gaming publisher Krafton and Unknown Worlds Entertainment (UWE), the US-based studio responsible for the 'Subnautica' series. Krafton acquired UWE in 2021 for an upfront payment of $500 million, with an additional earnout clause promising up to $250 million if 'Subnautica 2' met specific revenue targets.

As 'Subnautica 2' neared its release in mid-2025, internal projections indicated that the game was on track to trigger the substantial $250 million earnout. Krafton CEO Kim Chang-han reportedly viewed this as a "bad deal" and felt "taken advantage of," expressing concerns about "professional embarrassment" and potentially jeopardizing his position for overpaying for the studio. Despite warnings from his legal department that dismissing UWE's leadership would not negate the earnout obligation and posed significant "lawsuit and reputation risk," Kim Chang-han proceeded to seek alternative solutions.

A pivotal turning point occurred in June 2025 when Kim Chang-han consulted the AI chatbot ChatGPT to devise a "corporate takeover" strategy aimed at avoiding the bonus payment. ChatGPT initially suggested that canceling the earnout would be "difficult" but later provided a framework for an internal task force, dubbed 'Project X', to either renegotiate the deal or seize control of the studio. Following this, in July 2025, Krafton removed UWE's CEO Ted Gill and co-founders Charlie Cleveland and Max McGuire, and subsequently delayed the Early Access release of 'Subnautica 2'. The ousted executives promptly filed a lawsuit in Delaware's Court of Chancery, alleging breach of contract and claiming their terminations were a deliberate attempt to prevent the bonus payout.

The scandal gained significant public attention in November 2025 when pre-trial briefs revealed the allegations of ChatGPT's involvement, which Kim Chang-han later publicly admitted to, stating he used it "just like everyone else." The legal proceedings culminated on March 16, 2026, when the Delaware Court of Chancery issued a ruling largely in favor of Unknown Worlds Entertainment. The court ordered the reinstatement of Ted Gill as UWE's CEO with full operational authority and extended the earnout period to compensate for the disruption caused by Krafton's actions. The court explicitly criticized Krafton's CEO for outsourcing critical business decisions to an AI chatbot.

As of April 15, 2026, Ted Gill has been reinstated as CEO of Unknown Worlds Entertainment, and the $250 million earnout eligibility period has been extended until at least September 2026. Krafton has stated its disagreement with the ruling and is evaluating its options, with further litigation concerning damages still pending. Despite the ongoing controversy and shareholder criticism regarding Krafton's weak share price (which remains less than half its IPO price), CEO Kim Chang-han was reappointed for a third term at the company's annual general meeting on March 24, 2026. Krafton reported record revenue of approximately $2.28 billion USD and an operating profit of around $723 million USD for 2025, largely driven by the continued success of its 'PUBG' intellectual property, and is focusing on diversifying its game portfolio.