Webzen and Hound13 Clash Over Dragon Sword Refunds, $2.2M Payment

Webzen announced a full 100% refund for all in‑game transactions in Dragon Sword as the open‑world action/gacha RPG entered maintenance mode roughly one month after launch, and the publisher allegedly transferred about 3 billion KRW (around $2.2 million) to developer Hound13 shortly before a planned whistleblower interview that has not aired. The refund announcement came during a public escalation that has left players and the live service in limbo.

Dragon Sword, revealed originally as Project D in 2021, moved into what Korean players called a “zombie state” one month after release, with the development team reportedly still expressing interest in support even as operations became unstable. Webzen framed its refund decision at a shareholders’ meeting by saying it was reviewing a service suspension and the refunds; Hound13 says that shareholders’ comments directly triggered a contract termination notice.

Hound13 describes the publishing contract as a minimum guarantee only, with no licensing fee and payment timing set for after launch, and says Webzen acquired a 25 percent stake in the studio as part of a parallel investment agreement. Hound13 says it received two payments of 20 percent each - one month before launch and on the day of launch - and that the remaining 60 percent of the minimum guarantee was never received.

Webzen disputes Hound13’s account, saying it made advance minimum‑guarantee payments in two rounds in December and January and that it offered additional support while characterizing Hound13’s delays as responsible for depleted funds. Webzen said it is taking “very seriously” the fact that a contract termination notice and a public announcement were made at the same time without prior agreement while discussions were under way. GamingonPhone reported Webzen’s characterization that “Hound13 repeatedly postponed the schedule,” that this “extended development period is what drained Hound13’s funds,” and that Hound13 did a “contract termination without prior agreement.”

Beyond the basic payment dispute, Hound13 alleges Webzen demanded a majority stake as a condition for extra support, an allegation Webzen denies. The 3 billion KRW transfer restored Hound13’s access to funds, but sources have not confirmed whether that amount satisfies the disputed 60 percent of the minimum guarantee, is a partial settlement, or was wired for another purpose. Webzen has not provided an official explanation for the timing or stated purpose of the transfer.

Hound13 published an official Q&A rebutting Webzen point by point and has signaled plans to seek a new publisher. Key documents remain outstanding: the publishing contract clauses on minimum guarantee and payment schedule, the investment agreement proving a 25 percent stake, bank transfer records for December and January payments, and the shareholder meeting minutes that referenced suspension and refunds. Until those contracts and payment records are produced, the missing 60 percent, the hostile takeover claim, and Dragon Sword’s live service fate remain unresolved.