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London - A British trader accused by US authorities of an illegal role in the May 2010 Wall Street "flash crash" was granted bail by a London court on Wednesday after saying he opposed being extradited to the United States to face trial.
The flash crash saw the Dow Jones Industrial Average plunge more than 1 000 points in a day, briefly wiping out nearly $1trn in market value before partially recovering later.
The US Justice Department said on Tuesday it had criminally charged Navinder Singh Sarao, aged 36, with wire fraud, commodities fraud and market manipulation.
The case marks the first time US regulators have alleged that illegal activities played a role in the crash.
Making his first appearance at Westminster Magistrates' Court, Sarao was granted bail under stringent conditions. He is required to post £5m ($7.5m) himself while his closest relatives must produce a further £50 000.
In addition, Sarao will have to wear an electronic tag, comply with a night-time curfew at his home in Hounslow, west London, carry a mobile phone at all times to answer calls from police and report to Hounslow police station three times a week.
Sarao will have no access to the Internet for any purpose. His passport and those of both his parents will be taken away and kept by police, and Sarao is not allowed to leave England or Wales for any purpose.
"I suspect the last 24 hours have been somewhat dramatic for you," District Judge Quentin Purdy told Sarao at the end of the hearing. "But you now know the US seeks your extradition on very serious charges."
Sarao was warned he would face a fine or prison if he breached his bail conditions.
His lawyer declined to answer questions from reporters about his response to the US allegations.
The next court hearing in the case is scheduled for May 26, with a full extradition hearing to follow on August 18 and 19.
$40 million
Wearing a yellow sweatshirt and white tracksuit bottoms, Sarao spoke quietly 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.
"This has come as a bolt from the blue for Mr Sarao," his lawyer Joel Smith told the court.
The court heard that Sarao had £100 000 in various betting accounts and another £5m in a personal trading account of which £4.7m was a loan.
US authorities accuse him of personally profiting from his alleged wrongdoing by $40m, or £26m.
The family's neighbours in Hounslow said they had never seen any outward sign of unusual wealth, and the court hearing did not shed any light on the existence or whereabouts of such a large amount.
Aaron Watkins, representing the US judicial authorities at the London hearing, said that side of the investigation was "being actively followed up".
Sarao was arrested at the home he shares with his parents, a modest suburban house under the flight path of nearby Heathrow airport.
Smith told the court Sarao was born and raised in Britain and had attended Brunel University in London. He had worked for banks before becoming an independent trader.
US authorities accuse Sarao of using an automated programme to "spoof" markets by generating large sell orders that pushed down prices. He then cancelled those trades and bought the contracts at the lower prices to benefit when the market recovered, US authorities said.
Watkins told the court Sarao had worked as a trader from his home 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 had been asked to stop by US authorities but continued to do so, knowing it was wrong.
