> This is insane. Oh yes. However... > How could a small trader like that possibly move enough volume to even budge the market as a whole, never mind crash i

> This is insane. Oh yes. However... > How could a small trader like that possibly move enough volume to even budge the market as a whole, never mind crash it? He wasn't that small, but in any case the argument is basically "by spoofing, which scrambled some dumb HFT algos and made them crash the market". > They claim he was spoofing trades... That's more the domain of HFTs, Quite the reverse; HFTs and spoofers are basically the exact opposites. The archetypal spoofer would be a small trader, working alone, trying to make misleading orders to fool the HFT algos. From a spoofers point of view, they're trying to use cleverness to beat the speed advantage the HFTs have and make the markets fair. From an HFTs point of view, a spoofer is trying to use dishonesty to unfairly beat the speed advantage HFTs have. The legal system sides with the HFT view, but that's not entirely uncontroversial. > let's suppose this trader is guilty of everything they allege... He still couldn't have crashed the market, it would have been a chain reaction of algos dumping stock You are 100% correct! However, spoofing is illegal whereas dumb algos are not illegal. IF he triggered the mess by doing something illegal, then yeah, legally he can be blamed for the mess. That being said...the timing doesn't really work. Sarao's trades don't quite line up with the flash crash. (Roughly speaking, his spoofing was causing the market to make significant moves, but he was doing it in bursts, and the flash crash happened right after he's stopped one burst and the market had already recovered. And then after the flash crash happened and then recovered, he kept right on doing it, causing no additional crashes. Current research suggests it probably wasn't him. Worst case he might have spooked some HFTs algos and made them react poorly to some other triggering event. ...of course, his spoofing was still illegal, even if it didn't cause a flash crash.)