Since 2009, all re-releases of Cave Story were developed and published by Nicalis as part of a deal with its creator Pixel to help distribute it to a wider audience. In 2019, Nicalis founder Tyrone Rodriguez came under fire after the outlet Kotaku published an exposé detailing exploitative and offensive behavior towards other game developers, which he since apologized for. While not mentioned in the article, this controversy reignited rumors about Rodriguez' relationship with Pixel and the extent of Nicalis handling his game.

The most widespread and inconclusive rumor alleges that Rodriguez tricked Pixel into signing away his ownership of the rights to Cave Story. The evidence for this is inconsistent copyright credits between different versions of the game, as well as an instance in 2020 when Nicalis issued copyright takedowns to a decompiled fan project based on the source code of the original freeware version, claiming it was never made open source. Fans pointed out the freeware version is still available for free on Pixel's website, putting Nicalis' ownership into question. However, the exposé's author Jason Schreier stated that he could not corroborate this rumor because he received no comment from Pixel when emailed. Nicalis were originally planning to publish another game by Pixel, Kero Blaster, but it was instead published by PLAYISM for unknown reasons. Some theorized that the game's plot was a negative commentary about working with Nicalis, but when asked, Pixel declined to elaborate and left it open to interpretation. Pixel also included Rodriguez as a Special Thanks credit in the game, and activity on both of their social media accounts indicate they are still friends in real-life. Despite expressing on multiple occasions that he does not want to make a sequel to Cave Story, a prequel spin-off game was released in 2021, Cave Story's Secret Santa. While primarily developed by Nicalis, Pixel was said to have put "cute little touches" on the game during development and helped promote it through interviews. Pixel had continued involvement with Nicalis as recently as the game's 20th anniversary, and both he and Rodriguez confirmed that Pixel still receives royalties from their ports.

Of the other rumors that spawned from this controversy, the only one that remains true is Nicalis' continued lack of support for the Steam version of Cave Story, which has only received two known bug fixes since its release in 2011, while future ports came with more bug fixes, bonus content, and quality-of-life features. Another rumor that Nicalis stole fan-made mods and used them as bonus content in their ports was shown to be false. The creator of the Nemesis Challenge and Sanctuary Time Attack modes, as well as the creator of the Boss Rush mode according to a forum moderator who would later go on to work for Nicalis, confirmed that they had willingly submitted this content with permission to use them in official releases.