A British futures trader accused by U.S. authorities of an illegal role in the Wall Street "flash crash" that briefly wiped out nearly $1 trillion in market value five years ago, told a London court on Wednesday he opposed being extradited to the United States.
The U.S. Justice Department said on Tuesday it had criminally charged Navinder Singh Sarao, 36, of west London, with wire fraud, commodities fraud and manipulation. He is wanted for trial in Illinois.
Sarao, who was arrested by British police on Tuesday, appeared at Westminster Magistrates' Court, where District Judge Quentin Purdy said a full extradition hearing would take place in August.
"This has come as a bolt from the blue for Mr Sarao," his lawyer Joel Smith told the court.
Wearing a yellow sweatshirt and white tracksuit bottoms, Sarao spoke in a quiet voice to confirm his name, address and date of birth. He appeared calm as he sat in the dock a few seats away from a security guard.
Aaron Watkins, representing the U.S. judicial authorities at the London hearing, relayed to the court details of the charges announced in the United States on Tuesday.
Watkins said he would oppose bail because, if convicted, Sarao would face a long prison sentence and so had "very strong incentives" not to surrender to the court. The hearing was adjourned until 1300 GMT for further discussion about bail.
Sarao allegedly used an automated program to "spoof" markets by generating large sell orders that pushed down prices. He then canceled those trades and bought the contracts at the lower prices to benefit when the market recovered, U.S. authorities said.
He is accused of personally profiting by 26 million pounds ($40 million).
The case marks the first time U.S. regulators have alleged that market manipulation played a role in the May 2010 flash crash, in which the Dow Jones Industrial Average plunged more than 1,000 points before recovering towards the end of trading.
Watkins told the court Sarao had worked as a trader from his home in Britain operating primarily through a company he set up trading futures using commercially available software. This allowed traders to communicate with markets and place multiple orders almost simultaneously.
"On numerous occasions ... Mr Sarao is alleged to have spoofed the market," he said.
Watkins also said that Sarao, who was arrested at home, had been asked to desist by U.S. authorities but continued to do so knowing it was wrong.