Following its release, the fangame Undertale Yellow attracted public debate due to its soundtrack's use of preexisting songs and leitmotifs from Undertale, which caused videos and other related content to attract copyright claims from Materia Collective, the company which owns the rights to Toby Fox's music. Following a tweet at the start of 2024 where the developers explained that they would be working with Fox and Materia Collective to resolve the issues, Materia Collective CEO Sebastian Wolff posted a thread of his own claiming that the developers had failed to properly secure the necessary trademark, asset, and mechanical licenses needed to use the original game's music. When another user stated that Fox had provided "clearly defined permission for [Undertale's] music to be used" at the start of development in 2016, Wolff contested the claim, pledging to donate $10,000 to the developers if anyone could provide legally valid evidence of this that covers the full scope of alleged rights violations.

This prompted Fox himself to issue his own statement, relayed by Undertale Yellow's Twitter account on his behalf, stating that although Wolff was right in that they failed to secure permission "until very recently," he considered Wolff's bet to be "extremely unprofessional in a way I shouldn't have to explain." Fox revealed he had spoken to Wolff privately about the situation and advocated to help do right to well-meaning fans who made a mistake. Fox additionally revealed that he donated $20,000 to the nonprofit disability charity AbleGamers, as requested by Undertale Yellow's developers, to apologize for the fiasco, and stated that he would try to more concretely lay out the rights and licensing guidelines for Undertale's music in the future.