Sonic co-creator Yuji Naka is accused of insider trading

Yuji Naka, who co-created the video game Sonic the Hedgehog, was arrested in Tokyo on Friday on suspicion of insider trading involving Square Enix’s mobile game Dragon Quest Tact.

The Square Enix designer – who joined the Japanese conglomerate behind the Final Fantasy, Kingdom Hearts and Dragon Quest video games in 2018 – is accused of buying shares in developer Aiming in January 2020, based on inside information the there would be development of a mobile version of “Dragon Quest”.

According to Variety, the Tokyo District Attorney’s Office announced the arrest on Friday, saying Naka allegedly received confidential information about the smartphone game while he was employed by the major game publisher.

Naka, 57, who left the company last year, had been working on Square Enix’s poorly received Balan Wonderworld platform in early 2020 – at a time when the publisher and its partnership with Aiming on Dragon Quest Tact is yet to release had been told by Polygon and Engadget, which also cited arrest reports from Japan on Friday.

The programmer is accused of buying approximately 10,000 Aiming shares for around 2.8 million yen ($20,000) before the partnership was announced and knowingly using inside information to later sell the shares when their value rose.

In a statement Thursday to the Video Games Chronicle, Tokyo-based Square Enix acknowledged reports that former employees Taisuke Sazaki and Fumiaki Suzuki were under investigation for alleged insider trading and said it was “fully complying with inquiries from the Securities and Exchange Surveillance Commission cooperateā€¯. Naka had not been arrested when the company made this statement.

“As the investigation by the Tokyo District Procuratorate is ongoing, we will continue to fully cooperate with the investigation. We deeply regret the great concern this has caused to all concerned. We dealt with this incident rigorously, including internal disciplinary action against the alleged employees.”

Sazaki and Suzuki reportedly bought around 47 million yen ($336,300) of Aiming stock before it was publicly confirmed that they would be developing Dragon Quest Tact.

Naka was the lead programmer on “Sonic the Hedgehog” and created the fast, swirling fluidity of the legendary Sega mascot with artist Naoto Ohshima in the 1990s to work with Nintendo’s Mario Bros. franchise. Naka left Sega in 2006 and worked as an independent game developer for a long time.

He reunited with Ohshima on Balan Wonderworld in 2018. But when this platform game was released in 2021, it was considered a critical failure. Naka reportedly resigned as a result and sued Square Enix, claiming that he was in fact removed from Balan Wonderworld six months before its release. And said in a heated Twitter thread last April that Square Enix and developer Azest’s poor rollout for the action game was “a disgrace.”

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