Yuji Naka’s villain era continues as Sonic co-creator admits guilt

By Lee Brady,

Yuji Naka, co-creator of Sonic the Hedgehog and director of Square Enix-published Balan Wonderworld, has been arrested twice and indicted in relation to an insider trading case against several Square Enix employees.

Latest Update: After officially being indicted for alleged insider trading, Sonic the Hedgehog co-creator Yuji Naka has made an admission of guilt while on trial at the Tokyo District Court. The developer was accused of gaining profit from illegally purchasing stock using insider information regarding a then-unannounced Dragon Quest mobile game. This happened while Naka working at Square Enix on PS Plus Extra game Balan Wonderworld.

Yuji NakaYuji Naka, co-creator of Sonic, has admitted guilt to charges of having profited from insider trading.

As reported by NHK, Naka stated that there was "no doubt" in response to accusations of having violated the Financial Instruments and Exchange Act — a crime which can result in a fine of up to five million yen or up to five years in prison. In his opening statement, Naka clarified that he had learned about Square Enix's impending investment in Aiming's mobile Dragon Quest game while at the company and had gained over 20 million yen from selling shares that he had acquired using this information.

The court's decision regarding Yuji Naka's actions has yet to be reached.

Original Story: Yuji Naka is reportedly the third of three ex-Square Enix employees who have been arrested on suspicion of insider trading, with all three employees allegedly having purchased stock in mobile company Aiming just before Square Enix announced it would be working on a Dragon Quest mobile game. Aiming saw its stock rise after the announcement, resulting in Naka's arrest for alleged inside trading. Naka's second arrest, allegedly for investing in ATeam Entertainment before the company was announced to be involved in the development of the short-lived Final Fantasy VII The First Soldier, was revealed a few weeks later.

Yuji Naka FFVIIFinal Fantasy VII The First Soldier is due to shut down in January 2023 after launching late 2021.

Sonic Adventure producer Yuji Naka arrested

The arrest, which was reported by FNN Prime Online and translated into English by VGC, marks the sad denouement of a year that saw Naka purely embrace his villain era after the calamitous failure of 2021's Balan Wonderworld, a game he directed while working at Square Enix. In April 2022, Naka revealed that he had been removed as director of the game six months before launch and he had sued Square Enix for having done so and for not letting him finish the game.

In June, Naka mixed in with the development teams behind Sonic Origins over the music they included in the compilation, seeming to confirm (before awkwardly backtracking) Michael Jackson's involvement in Sonic the Hedgehog 3. After persistent rumours that Naka had helped seal the fate of the eventually cancelled Sega Saturn game Sonic Xtreme, supposedly by blocking its developers access to his Nights into Dreams engine, Naka took to Twitter in 2022 to contradict the reports and even challenge those who continue to doubt him.

Yuji NakaBalan Wonderworld, the universally panned title Naka directed with Square Enix.

For better or worse, Naka's name has been rather persistently in the news this year, delivering the kind of hot takes that once upon a time might have earned him a "f**k off" from Peter Moore. Tragically, however, the close of 2022 now sees the developer in a tough spot — if allegations of insider trading do happen to be true, Naka could see a fine of up to five million yen, or up to five years in prison.

Dragon Quest is a cultural phenomenon in Japan (owned by Square Enix), so anyone who would have prior knowledge of any company gaining the rights to produce a new Dragon Quest game in Japan would have a strong idea of how that company's stock might perform after that game gets announced — an advantage that would help that person play the stock market. A special investigation unit alleges that Naka did just this, purchasing 2.8 million yen worth of shares in Aiming while having access to that knowledge, although it was not confirmed whether Naka went on to sell his shares in Aiming for profit after.

Yuji NakaSome tweets from Naka over 2022.

Just a week after Sonic Frontiers reviews had seen Naka's old co-creation edging back into the gaming limelight, it's a shame to see the legendary game developer in such a bad spot. We'll update this story should any further information come to light — in the meantime, let us know your thoughts in the comments below.
Lee Brady
Written by Lee Brady
Staff Writer Lee loves writing about the game design of classic PS Plus Premium games and upcoming PS5 games like Marvel's Spider-Man 2 and Final Fantasy XVI. He's a big proponent of video games as an evolving artistic medium, though he's also a fan of Sonic the Hedgehog games, so the medium might want to keep looking for a better spokesperson.
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