I read through the lawsuit on Kotaku. It looks pretty damning, but doesn’t include the actual contract Crytek made with CIG - only references to it.
It’s worth noting that Crytek itself has had a lot of money troubles over the last few years, so this may be motivated by financial woes as much as by the actual contract breaches.
One particularly interesting complaint is copyright infringement: that the CryEngine was licensed for the development of a "single video game called ‘Star Citizen’, and that the license did not extend to “any content being sold and marketed separately”. And then CIG spun Squadron 42 off as a distinct product, still using the CryEngine. On the face of it, that sure looks like a license violation to me. We’ll have to see how this goes. If CIG takes the lawsuit as seriously as software development, Crytek may win on default judgment.
After reading some more, there are a few very interesting points, which reveals some information not previously public.
Crytek seems to have been involved early; in fact, the original development on Star Citizen may have mostly been Crytek doing the job. The company, now mostly defunct, apparently licensed out its engine on the cheap due to the close level of sharing and to further that sharing with an eye towards expanding their market. This would probably not have been cheap, and may have drained the company’s resources.
There used to be a projected completion date, which turned into a projected completion quarter, which turned into a projected completion year, which turned into a projected “soon”, which turned into a solid “We’re not going to talk about it”.