Among the entities accused of defaming Crop Circle Games is…Crop Circle Games.
At a Glance
- One year after its financial collapse, Prytania Media is suing former investor NetEase for alleged defamation.
Prytania Media—the parent company of now-closed game studios Crop Circle Games, Possibility Space, and Fang & Claw formed by Jeff & Annie Strain—is suing former investor NetEase for defamation. The lawsuit—filed on January 3, 2025—seeks $400 million in damages and blames NetEase executives for allegedly leaking confidential financial information to other investors, purportedly in retaliation of the Strains' efforts to help the Chinese conglomerate comply with American regulations.
The lawsuit—which NetEase has already begun to combat with a motion to remove the case to federal court out of Louisiana—shines new light on the sudden collapse of Prytania Media in 2023. At the time Jeff and Annie Strain blamed the fall of their studios on allegations that their employees were sharing confidential information with the press. Now they say NetEase's alleged mishandling of sensitive financial information played a major role.
NetEase denies these claims. "The allegations by Prytania Media and its founders Annie and Jeff Strain are wholly without merit, and we emphatically deny and will vigorously defend ourselves against them," a representative said in a statement to Game Developer. "Our record as a global gaming company speaks for itself, and we remain committed to conducting business with integrity."
"We are confident that the legal process will vindicate our position and shed light on the real reasons behind the demise of the Strains’ studios."
According to a copy of the lawsuit obtained by Game Developer, these Strains' efforts to assist with compliance of Committee on Foreign Investments regulations began shortly after NetEase invested $20 million into Crop Circle Games, a transaction that granted a 20 percent stake in the studio to the Marvel Rivals publisher. According to the suit, the pair were rebuffed by former NetEase executive turned Crop Circle board member Han Chenglin, who at one point emailed the plaintiffs "about keeping NetEase's investment in the company low profile to 'keep away from the radar of CFIUS.'"
The suit does note that "CFIUS reporting is not always mandatory," but "highly encouraged."
Months later, on February 23, 2024 Jeff Strain alleges that he received a text from Transcend fund managing director Andrew Sheppard, who "informed him that allegations of fraud and misuse of funds were being leveled against Crop Circle Games." Sheppard later "confirmed" to Prytania that NetEase was the source of the allegations, and that it was investigating claims that "funds had been moved from Crop Circle Games to other subsidiaries without prior consent of relevant stakeholders" and "quarterly financials were potentially materially inaccurate."
This was mere weeks after Crop Circle Games began furloughing employees. NetEase apparently also stated that "many key appoints had been let go" since "the potential leak" of—as the lawsuit states—"the foregoing inaccurate information."
The Strains say these statements NetEase made were "false and defamatory."
NetEase accuses the Strains of strange legal maneuvers
NetEase's initial response to the lawsuit has been to immediately file for a removal of the suit from the civil district court of Louisiana to federal court. One key reason for this removal, they argue, is that the Strains have included Crop Circle Games—a company they still effectively own—on the list of defendants.
On January 3, 2025 Jeff and Annie Strain resigned as members of the Crop Circle Games board, the same day they initiated their lawsuit. Their lawsuit names Crop Circle Games as a defendant, along with board member Han Chinlang.
"Plaintiffs claim that Defendant Han defamed them in a manner that made Plaintiffs’ businesses unattractive to investors, leading to their demise. Plaintiffs claim that Mr. Han ruined Crop Circle's business, and through Crop Circle, Plaintiffs' other businesses, despite the facts that Mr. Han sits on Crop Circle’s board and NetEase invested a substantial sum of money in Crop Circle. Plaintiffs allege that NetEase and Crop Circle should be vicariously liable for Defendant Han’s alleged statements," NetEase's filing reads, saying that the Strains have "improperly joined" Crop Circle as a defendant.
"Plaintiffs do not actually allege any wrongful conduct by Crop Circle. Instead, Plaintiffs’ sole theory of relief against Crop Circle is that: (1) Mr. Han allegedly made defamatory statements about Plaintiffs; (2) Mr. Han sits on Crop Circle’s board of directors; and therefore (3) Crop Circle is liable for anything Mr. Han might have said under principles of respondeat superior."
"Not only do Plaintiffs fail to allege any alleged misconduct by Crop Circle…throughout the Petition Plaintiffs allege the opposite—that Crop Circle was a victim of the alleged defamation," the filing continues. "Plaintiffs characterization of Crop Circle as an actual victim of the alleged wrongdoing along with Plaintiffs is consistent with the factual reality that for all intents and purposes Crop Circle and the Plaintiffs are one and the same" (emphasis via the lawsuit).
This is the latest development in the collapse of Prytania and its subsidiaries since April 2024. If the lawsuit proceeds, more information on the state of operations at Prytania Media may come to light.
Game Developer has reached out to legal representatives for the Strains and will update this story when a response is issued.