Yuji Naka, the inventor of Sonic, has been arrested for insider trading

While working at Square Enix, Naka claimed to have purchased shares in Dragon Quest developer based on inside knowledge

Yuji Naka, co-creator of Sonic the Hedgehog and former CEO of developer Sonic Team, was detained in Tokyo for insider trading. The story, initially reported by the Japanese news site FNN, has been confirmed in an English-language report by the Asahi Shimbun newspaper.

Naka is said to have purchased stock in developer Aiming in early 2020, based on inside information that it was working on a Dragon Quest mobile game called Dragon Quest Tact. At the time, Square Enix’s collaboration with Aiming on the game had not yet been made public, and Naka was working at Square Enix on the ill-fated platformer Balan Wonderworld.

The Tokyo District Public Prosecutors Office’s special investigations team, which initiated the arrest, stated that Naka purchased 10,000 shares in Aiming for roughly 2.8 million yen ($20,000) after learning about Dragon Quest Tact in late January 2020, before to the game’s announcement the following month. The presumption is that he was intending to profit from a rise in the share price following the announcement and release of the game, albeit current information does not indicate if he actually sell the shares.

Naka’s arrest on Friday followed the arrests of two other former Square Enix workers on the same allegations the day before. Investigators believe Taisuke Sazaki and Fumiaki Suzuki purchased 47 million yen ($336,000) in Aiming shares between late 2019 and early 2020, after Suzuki learnt about Dragon Quest Tact’s existence in November 2019.

According to the Asahi Shimbun, Sazaki and Suzuki profited tens of millions of yen through the sale of their Aiming shares following the introduction of Dragon Quest Tact in February 2020. According to the paper’s sources, Sazaki was also a member of the Dragon Quest Tact joint development team. In the credits for Balan Wonderworld, Sazaki earned a “Special Thanks” shoutout.

Warside has reached out to Square Enix for comment. In response to Sazaki and Suzuki’s detention, VGC released the following statement on Thursday:

Some media sites claimed today that former Square Enix workers were being investigated for potential insider trading. We have been completely working with the Securities and Exchange Commission’s inquiries. We will continue to fully cooperate with the inquiry while the Tokyo District Public Prosecutors Office conducts its investigation. We genuinely regret the considerable anxiety this has caused all parties involved. We have dealt with this incident rigorously, including taking internal disciplinary actions against the suspected employees.

Naka collaborated with artist Naoto Ohshima to create Sega mascot Sonic the Hedgehog. As the lead programmer on the original Sonic the Hedgehog and its sequels in 1991, Naka’s code was responsible for the game’s signature fast-paced, fluid visuals. Naka left Sega in 2006 and worked as an independent developer before joining Square Enix in 2018, where he collaborated again with Ohshima on Balan Wonderworld.

However, the game’s development did not progress as planned. Balan Wonderworld was published in March 2021 to mixed reviews and a backlash for seizure-inducing flashing moments. In April 2022, Naka disclosed that he was fired from the project six months before its release, that he had sued Square Enix over his dismissal, and apologized to fans for the game’s “unfinished” status.