Sonic co-creator Yuji Naka has been sentenced to two and a half years in prison and two separate fines, as he was found guilty of insider trading. According to Denfanminicogamer.jp, Naka was discovered to have purchased stock in two developers that were working on unannounced games based on lucrative intellectual property (IP) with the hopes of selling the stock at a later date after prices had increased.

One of the developers, ATeam Entertainment, later released Final Fantasy VII: The First Soldier, a mobile spinoff of its bestselling Final Fantasy series. As a software programmer, Naka was sentenced to two and a half years in jail and two fines totaling ¥2.5 million ($18 thousand) and ¥17 million ($1.2 million).

Insider Trading

According to the report, Naka was first arrested in November 2020 under suspicion of insider trading and admitted to the charges in March 2021. After that, he was accused of a second offense with regards to a separate case relating to mobile title Dragon Quest Tact.

For this case, he acquired 10,000 shares of the company Aiming and committed the crime while being an employee of Japanese gaming giant Square Enix, which co-developed both games. In addition to Naka’s sentence, the middleware manager of Dragon Quest 11, Taisuke Sasaki, and event manager of Dragon Quest 10, Mumiaki Suzuki, were also arrested in both cases.

Crimes and Consequences

The prosecution opposes Naka’s defense team’s call for a suspended verdict, claiming that he “gained unfair profits from a significantly more advantageous position than general investors, and undermined the fairness of the market.”

“There is no doubt that I knew the facts about the game[s] before it was made public and bought the stock,” Naka said at his sentence hearing.

Furthermore, Naka stated in court that he did not actively browse insider information.

Last year, Square Enix shut down Final Fantasy VII: The First Soldier after it failed to meet expectations.