Jeff Strain, co-founder of ArenaNet and co-creator of State of Decay, along with his wife Annie Strain, are taking legal action against NetEase, the creator of Marvel Rivals, for a staggering $900 million. The lawsuit, filed in January in the civil district court for the parish of Orleans in Louisiana and later moved to federal court, accuses NetEase of causing the devaluation and eventual closure of their studio by spreading damaging rumors among investors. The Strains allege that NetEase falsely claimed they had committed fraud with their latest venture, Prytania Media Group.

The amended complaint, as reported by IGN, begins with a strong statement: "This case is about the destruction of the careers of two gaming industry veterans and their company by a Chinese entity seeking to avoid compliance with United States law." The narrative provided by the Strains in the complaint is intricate, yet it does not fully clarify the events leading to the unexpected shutdown of Prytania Media's subsidiaries last year.

According to the Strains, NetEase initially invested in Prytania's subsidiary, Crop Circle Games, acquiring a 25% stake and placing Han Chenglin on the board, alongside Jeff and Annie Strain. Initially, the partnership was described as positive. However, tensions arose as NetEase expressed concerns over compliance with U.S. laws on foreign investment. The complaint alleges that NetEase asked the Strains to keep their investment "low profile" to sidestep regulations enforced by The Committee on Foreign Investment in the United States (CFIUS). They were also reportedly encouraged to establish branches in Canada or Ireland to facilitate NetEase's investments.

A significant part of the complaint focuses on NetEase's alleged connections to the Chinese Communist Party (CCP), suggesting that NetEase aimed to keep these links hidden from the U.S. government. The document references Tencent's classification as a "Chinese military company" by the U.S. government and reports that NetEase CEO Ding Lei allegedly used the threat of CCP retaliation against Activision Blizzard in 2023.

The Strains also mention that Lei was reportedly in the process of immigrating to the U.S. and had purchased a $29 million Bel-Air mansion from Elon Musk in 2020. They claim Lei was worried that publicity about NetEase's investments might jeopardize his immigration.

As the Strains continued to question and push for regulatory compliance, their relationship with NetEase deteriorated. Financial difficulties emerged at Crop Circle Games, leading to layoffs and furloughs in early February 2024. The internal atmosphere was reportedly filled with confusion, fear, and later anger over the handling of the situation.

On February 22, Jeff Strain received a text from a managing director of a venture firm invested in Prytania, alleging fraud and misuse of funds at Crop Circle Games. The Strains traced these rumors back to NetEase, with Han Chenglin admitting in a March board meeting that he was surprised by the company's rapid depletion of funds, suggesting this was the source of the rumors.

Following this incident, other investors reportedly withdrew their funding from Prytania, and the company struggled to attract new investors. As a result, Prytania Media and its subsidiaries became nearly worthless, a stark contrast to their previous valuation of $344 million. Crop Circle Games was completely shut down by the end of March last year.

In April, Annie Strain published a letter on the company website attributing the company's struggles to the industry's economic downturn and funding issues. She also referenced an alleged article by Kotaku reporter Ethan Gach that she claimed would have disclosed her personal health struggles without her consent. The letter was soon removed, and Kotaku did not publish the article. A week later, Prytania subsidiary Possibility Space closed, with Jeff Strain citing employee leaks to the press as the reason, without mentioning NetEase or fraud allegations.

The Strains and Prytania Media are suing NetEase for defamation, unfair trade practices, tortious interference with business relations, and negligence, seeking damages exceeding $900 million, which is triple their company's previous valuation.

In response, NetEase issued a statement to Polygon, firmly denying the allegations and expressing confidence in the legal process to vindicate their position and reveal the true reasons behind the Strains' studios' downfall.