‘Sonic the Hedgehog’ Creator Naka Yuji Arrested in Japan for Alleged Insider Trading

Naka Yuji, best known for creating the iconic “Sonic the Hedgehog” game, was arrested by the Tokyo District Public Prosecutors Office Friday on charges of insider trading.  

According to an official announcement by investigators, Naka allegedly obtained sensitive information regarding a new game for smartphones in the popular “Dragon Quest” series in January 2020, while employed by major game maker Square Enix. The game was being developed by Square Enix and online game production company Aiming.  

Prior to the announcement of the information, Naka allegedly purchased 10,000 shares of Aiming stock for approximately JPY2.8 million ($20,000), a violation of the Financial Instruments and Exchange Law.    

Two other men, a former Square Enix employee and his acquaintance, have also been arrested for pre-announcement purchases of Aiming shares. It is not yet known whether any of the trio sold their stock.     

Now aged 57, Naka was working for Sega in the late 1980s when he came up with the idea for the “Sonic” game as a competitor for the mega-hit “Super Mario” game series. Released in 1991, “Sonic” became a breakthrough for Sega, enabling it to grab a majority market share from rival Nintendo.

Naka, however, felt that he was not being properly credited for his contribution to the company’s bottom line and quit to join the American Sega Technical Institute. There he continued to develop new iterations of the “Sonic” game but, after reconciling with the parent company, returned to Japan in 1994.  

In 2006, Naka left Sega to launch his own game company, Prope, making games for the Nintendo Wii device. In 2016, he joined Square Enix, but left the company earlier in 2022 after he was removed as director of the game “Balan Wonderworld.” A lawsuit against his former employer followed, and, on Nov. 18, his arrest for insider trading.

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