‘Sonic the Hedgehog’ co-creator Yuji Naka arrested on suspicion of insider trading

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

The Square Enix designer — who in 2018 joined the Japanese conglomerate behind the video games “Final Fantasy,” “Kingdom Hearts” and “Dragon Quest” — is accused of buying stock in developer Aiming in January 2020 based on insider information that it would be developing a mobile version of “Dragon Quest.”

Tokyo District Public Prosecutors Office announced the arrest Friday, according to Variety, saying that Naka allegedly obtained sensitive information regarding the smartphone game while he was employed by the major game maker.

Naka, 57, who left the company last year, had been working on Square Enix’s poorly received Balan Wonderworld platform in early 2020 — a time when the publisher and its partnership with Aiming on “Dragon Quest Tact” had not yet been made public, according to Polygon and Engadget, which also cited arrest reports out of Japan on Friday.

The programmer is accused of reportedly purchasing approximately 10,000 shares of Aiming stock for around ¥2.8 million ($20,000) before the partnership was announced and knowingly using insider information to later sell the stock when its value increased.

In a Thursday statement to Video Games Chronicle, Tokyo-based Square Enix acknowledged reports that former employees Taisuke Sazaki and Fumiaki Suzuki were being investigated for suspected insider trading and said that it was “fully cooperating with requests from the Securities and Exchange Surveillance Commission.” Naka had not yet been arrested when the company issued that statement.

“As the investigation by the Tokyo District Public Prosecutors Office is underway, we will continue to fully cooperate with the investigation. We deeply regret the great concern this has caused to all concerned. We have dealt with this incident strictly, including internal disciplinary actions taken against the suspected employees,” the publisher said.

Sazaki and Suzuki allegedly purchased around ¥47 million ($336,300) of stock in Aiming before it was publicly confirmed that it would be developing “Dragon Quest Tact.”

Naka was the lead programmer on “Sonic the Hedgehog” and created the iconic Sega mascot’s swift, spin-balling fluidity with artist Naoto Ohshima in the 1990s to compete with Nintendo’s Mario Bros. franchise. Naka left Sega in 2006 and long worked as an independent game developer.

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