A UK home-based trader was arrested in London on Tuesday for causing the 'flash crash' in the United States stock market on May 6, 2010. The U.S. is now seeking his extradition.

UK trader Navinder Singh Sarao has allegedly been manipulating the futures market using a technique known as spoofing for around 5 years, Reuters reported.

The Justice Department and the Commodity Futures Trading Commission allege that Sarao set up an algorithm to help him place a flood of large sell orders of futures at a price that always stayed a bit higher than the best offer. He never intended to sell the orders and since he wasn't offering the best price, the algorithm made sure that he didn't accidentally sell them, according to Bloomberg.

These fake sell orders created an appearance of excess supply, which then drove down the price of futures. Sarao would then buy the futures to make a profit once the price fell, according to Reuters.

On May 6, 2010, the falling price of the futures market that Sarao was spoofing spread to other related markets, which led investors to abandon the market triggering a 'flash crash' in the Dow Jones Industrial Average, according to the New York Times. Sarao profited to the tune of almost $900,000 on the day of the flash crash, it is alleged.

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