$900M Lawsuit Claims NetEase Responsible for Prytania Media’s Downfall

Jeff and Annie Strain are suing NetEase for $900 million for allegedly causing Prytania Media’s closure. The lawsuit claims NetEase spread rumors among investors which resulted in them losing trust in the company, which in turn made it hard for the Strains to find new investors.

Jeff and Annie Strain founded Possibility Space and Crop Circle Games in 2021 and 2022, respectively. These studios are under Prytania Media’s umbrella. According to the lawsuit, NetEase was an early investor of Crop Circle Games, purchasing roughly 20% of the studio’s share.

This investment earned NetEase a spot in the studio’s Board of Directors. Han Chenglin was chosen by NetEase to be their representative on the Board. The lawsuit claims that both Jeff and Annie Strain were enthusiastic about developing a relationship with NetEast, but NetEase’s alleged concerns with compliance with United States law strained the relationship.

According to the lawsuit, prior to the official investment of NetEase in Crop Circle Games, Han Chenglin emailed Jeff and Annie Strain about keeping NetEase’s investment in the studio low profile to keep away from the radar of the Committee on Foreign Investment in the United States (CFIUS).

Shortly after that, NetEase’s counsel in the transaction believed that NetEase did not need to have a CFIUS filing because the studio’s product was still in development. Jeff and Annie believed this information and went ahead with the investment, but they quickly found out after the completion of the investment that NetEase was not complying with the United States law.

The lawsuit claims that NetEase even pushed Prytania Media to open studios in Canada and Ireland to help them in its avoidance of CFIUS. Annie Strain attempted to talk to NetEase about complying with the United States law regarding the investment multiple times, but the repeated inquiries only made the relationship between Prytania Media and NetEase to become tense.

In 2024, Jeff Strain allegedly received a text message from Andrew Sheppard, the managing director of Transcend. The message mentions that there were allegations of fraud and misuse of funds directed at Crop Circle Games. The lawsuit claims that one of Transcend’s limited partners mentioned the rumor came from a “close-connection” that had invested in “another Prytania Media company.” Transcend also mentioned that the limited partner was a publicly traded gaming company headquartered in Asia.

Sheppard later confirms that NetEase was the one behind the rumor, according to the lawsuit. When Jeff and Annie Strain confronted Han about the allegations, Han admitted that he told his co-workers he was surprised that Crop Circle Games had run out of operating funds. The Strains believe that this is “likely” where the rumors originated.

Jeff and Annie Strain claim that these rumors caused the downfall of Prytania Media because they couldn’t find an additional investor or a partner to publish Crop Circle Games’ flagship game. The Strains claims that the rumor allegedly brought the $344 million value of Prytania Media to “nearly nothing.”

In 2024, Crop Circle Games and Possibility Space shut down within a month of each other. Jeff Strain claims that Possibility Space’s shutdown was due to a publishing partner and the studio agreeing to the cancellation of the game due to confidential information being leaked to a reporter. The reporter has never published an article containing the aforementioned leaks.

Jeff Strain is an industry veteran, working on games such as World of Warcraft, Starcraft, and Diablo. He has also shipped games like State of Decay and Guild Wars.