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Sonic Creator Faces 2.5 Years In Prison

A decision has been made by the court presiding over a case involving Yuji Naka, co-creator of the "Sonic the Hedgehog" series. Last year, Naka was arrested twice in Japan on suspicion of two counts of insider trading. Naka and others who worked at Square Enix during the development of "Balan Wonderworld" were charged with buying shares in two studios working on games that weren't yet public knowledge. Though he was indicted late in December, Naka didn't plead guilty to these charges until March 2023, when he said, "There is no doubt that I found out about the games before they were made public and bought shares in them."

On June 1, according to a report from Abema Times (via Google Translate), the Tokyo District Court is looking to sentence Yuji Naka to serve two and a half years in prison, and pay a fine of ¥172.5 million (just over $1.2 million USD). Abema Times reports that Naka was first ordered to pay just ¥2.5 million, but another ¥170 million was added because Naka did not appear to show any remorse for his actions. It is the opinion of the prosecutors on this case that "the crime was committed based on strong criminal intent, which is malicious," hence the heavy punishment.

Naka and his defense team will be seeking a reduction in this sentence before it is made official, but it is unlikely at this time that he will beat any of the charges set against him.

Yuji Naka's ugly split from Square Enix

Naka was the president of Sonic Team from its creation to 2006, when he left to form his own game company Prope. After ten years there, he moved on to Square Enix and began development on "Balan Wonderworld," a spiritual successor to Naka's earlier cult classic "Nights Into Dreams." However, his tenure with the company did not end on a positive note, and it would have been seen as a blemish on his impressive resume even if the insider trading had never occurred. 

Naka left Square Enix partway into "Balan Wonderworld" development in 2021, and has since sued the company for allegedly releasing the game unfinished. He would go on to claim that Square Enix does not care about the players who purchase the company's games. Further illustrating the falling out he had with the team behind "Balan Wonderworld," he went so far as to black out longtime collaborator Naoto Ohshima from a photo on Twitter. He would later claim that he did this because he learned his supposed partners had been talking about him behind his back.

It was during the tumultuous development cycle of "Balan Wonderworld" that Yuji Naka began the insider trading that led to this court case.

A timeline of Yuji Naka's insider trading charges

While "Balan Wonderworld" was being developed, and roughly around the time of its critically-panned release, Naka purchased 10,000 shares of "Dragon Quest Tact" studio Aiming, which was published by Square Enix. Naka had gotten a heads up about the title after accessing privileged data belonging to the publisher. He and a pair of co-conspirators had the intention of selling them once it was revealed as the game's developer, but this action led to his first arrest in November 2022.

Less than a month later, Naka was arrested again for the same crime, only on a much larger scale: buying 130,000 shares in studio ATeam Entertainment before mobile game "Final Fantasy 7: The First Soldier" was announced. Again, this was a game that was meant to be published by Square Enix, only this one was eventually canceled. It's this last charge that keeps blowing fans' minds, with some noting that Naka's facing prison time for a title that never even made it to market before he admitted his guilt.

He was formally indicted in December 2022, then admitted his guilt in March. Despite this, the Sonic creator and his legal team has requested that his exorbitant fine and sentence be reduced. According to the report from Abema Times, Naka may finally be expressing more of a sense of remorse towards the court, but this turn may be too little, too late. A final decision will be reportedly be made on July 7.