Jeff and Annie Strain Sue NetEase for $900 Million, Alleging It Erroneously Told Investors They Committed Fraud

Jeff Strain, co-founder of ArenaNet and co-creator of State of Decay, on with his woman Annie Strain, are suing Marvel Rivals creator NetEase for $900 million, alleging that NetEase caused the devaluing and eventual closure of their workplace by spreading rumors among investors that the Strains had committed fraud with their astir caller venture, Prytania Media Group.

In a lawsuit filed successful January successful the civilian territory tribunal for the parish of Orleans successful Louisiana and since moved to national court, the amended ailment seen by IGN opens with a hefty accusation: "This lawsuit is astir the demolition of the careers of 2 gaming manufacture veterans and their institution by a Chinese entity seeking to debar compliance with United States law."

The communicative told by the Strains successful the ailment is simply a analyzable 1 that does not afloat capable successful the galore questions near past twelvemonth erstwhile Prytania Media's subsidiaries unexpectedly unopen down, 1 by one. Per their account, NetEase invested aboriginal successful 1 of Prytania's subsidiaries, Crop Circle Games, taking a 25% stock and seating Han Chenglin connected the institution board, with Jeff and Annie Strain taking the different 2 positions.

At first, they say, the narration was a affirmative one. However implicit time, they accidental that NetEase leaders and representatives began to explicit interest astir compliance with U.S. laws regarding overseas investment, including successful astatine slightest 1 email asking the Strains to support their concern "low profile" truthful arsenic to debar having to comply with rules laid retired by The Committee connected Foreign Investment successful the United States (CFIUS). The ailment says they were asked to unfastened branches successful Canadia oregon Ireland successful bid to marque it easier for NetEase to invest.

A important information of the ailment endeavors to outline NetEase's alleged ties to the Chinese Community Party, suggesting NetEase wanted to support those connections confidential from the United States government, and citing some Tencent's declaration arsenic a "Chinese subject company" by the U.S. authorities earlier this year, and reports that NetEase CEO Ding Lei allegedly utilized the menace of CCP retaliation against Activision Blizzard backmost successful 2023 successful its dealings with the institution implicit licensing.

The brace besides assertion they were told that Lei was successful the process of immigrating to the United States into a $29 cardinal Bel-Air mansion sold to him by Elon Musk successful 2020. They accidental that Lei expressed interest that his migration would beryllium threatened if NetEase's investments were publicized.

The Strains accidental that they continued to inquire questions and propulsion the institution astir regulatory compliance, and implicit clip their narration with NetEase began to interruption down. It besides seems that the institution began to person wealth troubles astatine immoderate constituent during this period, due to the fact that successful aboriginal February of 2024, Crop Circle Games laid disconnected immoderate of its unit and furloughed others, and IGN understood astatine the clip from sources adjacent to the workplace that internally determination was important confusion, fear, and aboriginal choler internally astatine however the concern was handled.

In the Strains' complaint, they accidental that connected February 22, Jeff Strain received a substance from a managing manager of 1 of the task firms that invested successful Prytania saying that Crop Circle Games was being accused of fraud and misuse of funds. The Strains assertion they traced the rumors backmost to its source, saying that the manager claimed helium had heard this from NetEase. In a committee gathering successful March, Han Chenglin admitted that helium told his coworkers "I'm truly amazed that the institution is moving retired of runway truthful quickly," and suggested this was wherever the rumor had travel from.

The Strains allege that pursuing this incident, different investors began to propulsion backing from Prytania, and the institution could not find immoderate caller investors to enactment with. According to the complaint, successful the ensuing weeks and months Prytania Media and each its subsidiaries came to beryllium "worth astir nothing," having erstwhile been estimated to beryllium worthy $344 million. Prytania shuttered Crop Circle Games wholly astatine the extremity of March past year.

Then, successful April, Annie Strain published a lengthy missive connected the institution website successful which she blamed the caller manufacture economical downturn and inability to find backing for the company's struggles. She besides repeatedly mentioned an alleged nonfiction being written by Kotaku newsman Ethan Gach that she claimed would person outed her ain idiosyncratic wellness struggles without consulting her. The missive was taken down not agelong after, and Kotaku ne'er published the nonfiction successful question. However, Prytania subsidiary Possibility Space shuttered a week later, with Jeff Strain blaming employees leaking accusation to the property for the closure. Neither NetEase, nor allegations of fraud were mentioned astatine this time.

Jeff Strain, Annie Strain, and Prytania Media are suing NetEase for defamation, unfair commercialized practices, tortious interference with concern relations, and negligence. They are seeking damages successful excess of $900 million, triple their company's anterior valuation.

NetEase shared the pursuing connection with Polygon successful effect to the suit:

The allegations by Prytania Media and its founders Annie and Jeff Strain are wholly without merit, and we emphatically contradict and volition vigorously support ourselves against them. Our grounds arsenic a planetary gaming institution speaks for itself, and we stay committed to conducting concern with integrity. We are assured that the ineligible process volition vindicate our presumption and shed airy connected the existent reasons down the demise of the Strains’ studios.

Rebekah Valentine is simply a elder newsman for IGN. You tin find her posting connected BlueSky @duckvalentine.bsky.social. Got a communicative tip? Send it to [email protected].