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Autistic futures trader who triggered flash crash spared prison

134 points by prostoalex 7y ago

acqq 7y ago
“helped trigger a U.S. stock market “flash crash”” is IMHO just an exaggeration typical for U.S. justice: “kid better cooperate with us or you’ll get millions of years in prison.” He earned 900k on that day. It doesn’t seem plausible.
- noident 7y ago
  Definitely an inflated claim by the prosecution. You cannot blame a major market event on the actions of a single individual. I would say in spite of that that this is one of those rare cases where the justice system comes back with a fair sentence.
- trhway 7y ago
  it seems that there were a lot of participants doing the same. Only one of them happened to be not a well connected hedge fund.
safog 7y ago
The autism bit aside, it looks like why they got him in the first place was that a technique he used (spoofing) was illegal in the US. Given he lives in England why was he extradited to the US? Is the summary that US has enough political power to have anyone who breaks US law wherever they are situated extradited and tried here?
- twodave 7y ago
  Ostensibly he was extradited because among the victims of the crime were U.S. corporations.
  - mywittyname 7y ago
    Also, Britain also seems to give investors and banks undue influence over their judicial system. So it isn't so far fetched for them to throw a citizen to the wolves when it comes to committing crimes that impact the financial institutions of other nations, particularly the USA.
  - goatinaboat 7y ago
    he was extradited because among the victims of the crime were U.S. corporations. I don’t know why this was downvoted. Recent events have proved that if the victim is a British motorcyclist, for example, extradition does not apply. https://www.bbc.co.uk/news/uk-england-northamptonshire-51228262 https://www.bbc.co.uk/news/uk-england-northamptonshire-51228...
    - lonelappde 7y ago
      That's not because the victim was a person. That's because the perpetrator was an elite -- a member (via marriage) of the regime that is protecting her.
- seibelj 7y ago
  Essentially yes. The SDNY especially has a long arm and uses it aggressively. The US is the world police, although other countries are responding now. I actually think this is a major reason why blockchain and stablecoins will succeed longterm in becoming global financial rails - the US has weaponized the dollar and the dollarized banking system, which is pushing alternatives to develop out of genuine need.
- henryfjordan 7y ago
  He was not just minding his own business in the UK doing something legal there but not legal in the US; He was interacting with US Markets, hence the US Jurisdiction.
  - joshschreuder 7y ago
    Is the definition of US markets based on where the exchange is headquartered? The internet has made global crimes interesting, that's for sure. I would have thought the crime would have to be prosecuted in the criminal's home country given that's where he was doing the work from.
    - henryfjordan 7y ago
      Yes. The law cares about where you have a "presence". Since the exchange is headquartered in the US and you send your orders there, you are doing business in the US, making you subject to US laws. The law wants, amongst other things, justice for victims. So when your victims are in some country, expect to be tried there.
- jessriedel 7y ago
  With many exceptions, don't most developed countries respect each other's laws? Certainly, if someone commits a traditional crime (burglary, assault, etc.) and flees to another country, they are usually extradited. In the modern world where you can commit electronic crimes without being physically present, it's harder to compile enough evidence against the accursed remotely to justify extradition, but it certainly happens regularly. https://securityboulevard.com/2018/04/do-cybercriminals-ever-get-extradited/ https://securityboulevard.com/2018/04/do-cybercriminals-ever...
  - deleted 7y ago
    [deleted]
- btilly 7y ago
  He was extradited to the US because there is an extradition treaty that gives the US the power to extradite people from the UK for meeting a reasonable suspicion test that they committed a crime in the US that is a crime in both countries and carries a sentence of at least a year. The treaty is reciprocal. The UK has an equivalent right with respect to people in the US who committed a crime in the UK who meet a probable cause test. An independent review concluded that the two tests used in the two countries are worded differently but effectively equivalent.
  - pjc50 7y ago
    .. although this doesn't apply to everyone, a cause of some recent controversy: https://apnews.com/d48c57507ef7e627f05afb95c2a61128 https://apnews.com/d48c57507ef7e627f05afb95c2a61128
    - btilly 7y ago
      As far as I know, this is the first UK extradition request to be denied by the USA, while the UK has denied at least 10 extradition requests to the USA. My information is from https://uk.usembassy.gov/our-relationship/policy-history/the-u-s-uk-extradition-treaty/frequently-asked-questions-on-the-us-uk-extradition-relationship/ https://uk.usembassy.gov/our-relationship/policy-history/the.... Check the section on why it is easier to extradite in one direction versus the other. (Which hasn't yet been updated to include this refusal.)
      - jedberg 7y ago
        The UK won't extradite for any crime that carries the death penalty, because they believe the death penalty is inhumane. I believe that accounts for all of their denials.
        btilly 7y ago
        Not quite all. There was also the case of Gary McKinnon whose extradition was denied because the UK believed he would commit suicide if extradited.
- rhacker 7y ago
  I AM totally confused by this as well. We can't have it both ways. Let's think about this in a COMPLETELY different perspective. Take elections as an example. Our 2016 elections were apparently never hacked, but there's a lot of conversation going on right now about "Russian Interference" but we're not specifically arresting Russians are we? So what makes it OK for someone in a country we don't have extradition treaties with to just let them off the hook vs a country we do? In other words, the world is TOTALLY BONKERS. I mean specifically, am I breaking a law in the next sentence in China and should be arrested and put in a prison camp in CHINA for this: So this happened: https://en.wikipedia.org/wiki/1989_Tiananmen_Square_protests https://en.wikipedia.org/wiki/1989_Tiananmen_Square_protests
  - gen3 7y ago
    We actually do nab people who break the law in countries we can’t extradite from. People identified working in APT (advanced persistent threat) groups get labeled and watched, then grabbed when they travel to a country where the USA or affiliated can extradite. It normally happens when they go somewhere warm for a vacation.
    - ryanmercer 7y ago
      > then grabbed when they travel to a country where the USA or affiliated can extradite. And some countries, Israel for example, have actually sent assets to other countries to flat out kidnap and smuggle them out. The (probably) most high profile example of this being the abduction, confinement, and smuggling of Adolf Eichmann by Shin Bet and Mossad personnel. There are films about this, one being Operation Finale. Other countries have done this to varying levels, including the United States. Some can be found starting at this point in the extraordinary rendition wiki entry https://en.wikipedia.org/wiki/Extraordinary_rendition#Historical_instances https://en.wikipedia.org/wiki/Extraordinary_rendition#Histor...
    - markdown 7y ago
      > We actually do nab people You've actually escalated to assassinating people (ref: Soleimani)
- OJFord 7y ago
  That's a good way of putting it, because in a recent manslaughter case the US citizen (driving on the wrong side of the road) flew home on diplomatic immunity (a familial extension, not even the diplomat herself) and the US has refused extradition. I think the immunity was eventually deemed not to apply (or at least to be questionable) but even if not there was precedent of a Briton's immunity being waived for extradition to America; a favour not repaid in this case. So yes, 'political power' indeed.
- james-imitative 7y ago
  > Given he lives in England why was he extradited to the US? This scares me a great deal. Totally bonkers totalitarianism from a rogue state.
  - edm0nd 7y ago
    The UK is a CCTV surveillance state and part of the Five Eyes intelligence alliance tho so not like it's any better.
- mnm1 7y ago
  Yes, exactly. This guy never left the uk, yet he committed a us crime? If China had this power they could extradite almost every single American who watches porn. The real fallacy is believing that laws have reason and logic behind them, that they are fair. Once you go down that path, you're done for. Once you realize that laws have no logic and their enforcement even less, you realize most criminals, like the one convicted in this story, just happen to be unlucky. Whether they actually harmed society is irrelevant and usually unknown. This is a perfect example of that. The machine that goes by the name "justice" is anything but and will chew out and spit anyone who gets in its way, regardless of facts, what happened, or even laws. The only sane thing is to stay out of its way, but once caught within, nothing matters. Clearly, this sets an expectation that if you live in a country with extradition treaties with the US, you better be rich enough to afford a US lawyer or smart enough to understand all of its countless number of laws on every level. In other words, you just need to do something impossible. Surely that shouldn't be a problem should it?
  - Mirioron 7y ago
    >This guy never left the uk, yet he committed a us crime? If China had this power they could extradite almost every single American who watches porn. Extradition usually requires it to be a crime in both countries. Ironically, due to obscenity laws, it might actually be possible to do it over porn in some edge cases. >Clearly, this sets an expectation that if you live in a country with extradition treaties with the US, you better be rich enough to afford a US lawyer or smart enough to understand all of its countless number of laws on every level. Unfortunately, this isn't even new. The case of Kim Dotcom shows just how ridiculously far US "law enforcement" can go at the behest of organizations such as MPAA/RIAA.
crazypyro 7y ago
This is a fall guy for the flash crash. Yeah, he was spoofing orders, but so were a bunch of other people. Read the SEC report on the flash crash. Interestingly, he also lost his entire $50 million fortune to a bunch of terrible investments, including some downright frauds. Related article (goes into details about how he lost his money): https://www.livemint.com/Money/TYUUtwYOj0VIPhFFyLICQM/How-flash-crash-trader-Navinder-Singh-Sarao-went-from-genius.html https://www.livemint.com/Money/TYUUtwYOj0VIPhFFyLICQM/How-fl...
- crazypyro 7y ago
  Here's the SEC report I mentioned. https://www.sec.gov/news/studies/2010/marketevents-report.pdf https://www.sec.gov/news/studies/2010/marketevents-report.pd...
etaioinshrdlu 7y ago
Incredible that it has taken 10 years for this case to be resolved. Still, he was only charged 5 years after the event apparently. He caused the market to tank by billions of value but he only made $900k. It is not like billions of dollars of value are destroyed when investors sell stock. It sounds like the market had a crash as they tend to sometimes do and in this case the authorities decided it was this guy who did it! I think that analysis is quite tenuous. Anyone who sold stock participated in the crash. It seems nuts to try to assign blame.
- im3w1l 7y ago
  Yeah, how much the market tanks is fairly irrelevant since it's just a paper loss and will pop right back. More interesting is how much money various actors made/lost.
  - aldanor 7y ago
    Market is a zero sum game (less the transaction costs), if someone lost then someone won. It's just those who lost are the ones who have big mouths, wallets and clients
    - frockington1 7y ago
      That's not how the market works. It is not zero sum. An easy counter point is dividend payouts.
      - aldanor 7y ago
        On the intraday scale less the transaction costs and dividend payouts. Trades are trades, if one party buys the other party sells and vice versa; there's always two sides.
        yellowstuff 7y ago
        I don’t follow. If a stock keeps going up a share could change hands 10 times in a day, with 9 traders having positive realized PNL and 1 trader having positive unrealized PNL.
kyleblarson 7y ago
Clearly he's a fall guy, everyone was spoofing orders. This guy is likely a hero over on r/wallstreetbets.
- aldanor 7y ago
  People are spoofing orders on big exchanges today, without even trying hard to cover it. If you have access to tick level market data and a bit of time you can find clear spoofing patterns fairly easily. Not on that scale, but enough to make money to pay some bonuses for sure
  - ianai 7y ago
    I wonder if that’s contributing to what seems like a market that can’t go down.
    - joejerryronnie 7y ago
      There’s just not many other places to put your money to work right now.
- james-imitative 7y ago
  Agreed.
mellosouls 7y ago
I'm not saying it isn't the case here, I've no idea (and the little I've read of his backstory is believably indicative), but this autism or Asperger's defence seems to be being raised every time a hacker gets arrested. It seems to be becoming the new "depression" in leniency arguments hitting the headlines, at least for tech related miscreants.
- dmix 7y ago
  I’ve watched plenty of prison TV shows and it would indeed be a far worse punishment for such a person and should very much be considered seriously by the courts in sentencing and bail hearings. >> His lawyers said the time Sarao spent in jail in Britain was "unbearable" because of his autism, saying it amounted to "a torture of sensory stimulation, sleep deprivation and forced socialization," and that he became suicidal. They said they were concerned that Sarao may not be able to survive another stint behind bars. His autism is clearly not on the mild side of the spectrum. He lives at home with his mom even as an adult and rarely leaves his room. The courts are entirely capable of understanding this context, compared to say someone with a mild form of autism who can still be functionally social in forced situations. Not to mention when considering intent and motivation behind the crime (which a severe case of autism can no doubt play a role) during sentencing plus their willingness to accept fault. But ultimately this person also returned $12M in funds me made from the loophole, was a first time offender with a stable future, and helped them catch other nefarious traders. So even without the autism stuff he had a very good argument against any prison time.
  - mellosouls 7y ago
    Agree with most of that, but I'm commenting on what appears to be a trend in defences, at least in ones I recall from the headlines.
    - dylz 7y ago
      I wouldn't be surprised if it was more of a trend on the demographic that commits that type of crime too...
grandridge 7y ago
If anyone thinks this guy triggered the flash crash, ive got some stuff I want to sell you
thanatropism 7y ago
I feel like "autistic" may be the sole case in which wide (and improper) use as metaphor -- compare "crippled" -- does harm the neurodiverse.
- samatman 7y ago
  I disagree that it's the sole case, and also fail to see the relevance: Sarao is autistic, according to his own defense attorneys, and y'know, he probably is. It's kind of a sensational thing to add to a headline, but that's how headlines have always worked.
segmondy 7y ago
I think the real issue not addressed is that the system is so flawed, that a "rogue trader" could mess with the market. Let's imagine the typical US villain, Russia, North Korea, blah, blah. Let's say they have a few of their folks figure out weaknesses in the trading system then trade and then trigger a bunch of flash crashes everyday for a week or more. What will that do the market? How much billions would be lost?
- partiallypro 7y ago
  The fact that it was only a flash crash and not a crash, I think actually shows the strength of the system. No one really panicked. If a flash crash happened every week, they would just slow down trades and push more to specialists. I don't think it would be as catastrophic as one might think. It would be a minor shake up.
  - andreilys 7y ago
    Tell that to all the traders whose stop losses were triggered due to flash crashes
    - samatman 7y ago
      I'm pretty sure he's not saying a flash crash is harmless, just that it's less harmful than plunging the economy into a worldwide recession.
    - ycombobreaker 7y ago
      that value wasn't "lost" from a holistic sense, but transfered to the counterparty. It's a good argument for why stop orders suck, though. the triggering mechanism is too easy to spoof in volatile/illiquid conditions.
    - scarejunba 7y ago
      Sure, I will. That's the risk of a stop loss, man. TANSTAAFL. The country doesn't lose anything because the value is transferred to whoever takes the other side.
onetimemanytime 7y ago
I guess they had to charge him and then agree to no jail. But still, I wonder if he really knew right from wrong. (A child can pull the trigger that kills the person, but maybe he was told that pulling the trigger will make the person laugh...or whatever.)
- TheOperator 7y ago
  Sure he did he's not stupid he understands fucking with the market has effects on people. Autistic people have a different sense of morality. Acting like an autistic genius can't understand that doing illegal things which contributes to the stock market crashing for the sake of profit is bad... Is mostly infantilizing. I mean his lawyer argued that but his lawyer is trying to exploit people like yourself.
  - somebodythere 7y ago
    I'm not convinced that the stock market crashing (briefly, even) is inherently bad.
  - onetimemanytime 7y ago
    Are you a doctor...and is he your patient?
    - TheOperator 7y ago
      The person in the story may not be my patient but I've been around the block enough times to understand WHY it is being thought that he is incapable of moral reasoning. I can speak to that subject without being a doctor. A doctor also in all honesty would almost certainly have less expertise in the subject than myself unless they were psychologists or similar. I feel compelled to speak on the subject because the general attitude that autistic people are fundamentally amoral, fundamentally incapable of knowing right from wrong leads to stigma and mistreatment while not actually being true. The very idea that you have to consult a doctor to judge if an autistic person, not the highest functioning but far from the lowest, is capable of moral reasoning is an idea that leads to stigma and "othering" and exclusion and dehumanization. If I come off as aggressive it's because I see your beliefs as personally threatening.
james-imitative 7y ago
> Before his own indictment, Sarao himself lost millions in assets to fraudsters who found him uniquely gullible and easy to cheat, his lawyer said. The irony is that he had millions in assets in the first place. Lol.
CRUDite 7y ago
If you read his reply / notes to the sec, he states how he was able to place orders without being front run. He asked developers to amend sierra chart. As a result, if placing a large contract order, rather than see price tick away from it he got instant fills. Ive zero doubt this is why he was fingered. Taking from the hf funds.. who think they have some right to impose a defacto tobin tax on transactions and justify it by calling themselves "liquidity providers!" He is guilty of spoofing, but the flood is caused by bots, or when they stop playing. He mentions his networth was constructed mostly over 50 days. On ' normal days ' you have to contend with smaller ranges where entries are key and those sort of intant fills are a massive advantage. Of course since he documented it the cat got out of the bag, many that had used this method were super annoyed! Bitmex seems to be the new wild west these days, all those techniques are used and more with 0 accountability
- jb775 7y ago
  Can you post a link to his reply/notes to the SEC?
  - crazypyro 7y ago
    I can't find the original source on bloomberg, but this includes his emails to CTFC (the relevant regulator for e-mini futures) https://www.businessinsider.com/emails-sent-by-trader-navinder-sarao-2015-4 https://www.businessinsider.com/emails-sent-by-trader-navind...
- frandroid 7y ago
  > Taking from the hf funds.. who think they have some right to impose a defacto tobin tax on transactions You just blew my mind there. Of course!
- thebruce87m 7y ago
  Can some turn this in to non financial speak so that I can follow it? It sounds interesting but I don’t understand what he did.
jb775 7y ago
I'm surprised this article doesn't mention the lengths he went to hide his money using shell companies. Makes me question the "he regarded trading as a video game in which the object was to compile points not money" narrative. (on the flipside, if I ever get arrested for manipulating markets, I'm hiring this guy's lawyer) Per the official criminal complaint document: Around the time of the Flash Crash, SARAO took significant steps to protect his assets. In late April 2010, SARAO established a new entity, Nav Sarao Milking Markets Limited, which was incorporated in Nevis. SARAO appears to have created this company as part of a tax avoidance strategy pursuant to which he also established, in 2012, International Guarantee Corporation, incorporated in Anguilla.[1] [1] https://www.justice.gov/sites/default/files/opa/press-releases/attachments/2015/04/21/sarao_criminal_complaint.pdf https://www.justice.gov/sites/default/files/opa/press-releas...
- jedberg 7y ago
  > SARAO appears to have created this company as part of a tax avoidance strategy This fits with the description of getting more points. After he got the points, he wanted to keep more of them, so he figured out a way to do that.
- edm0nd 7y ago
  >Makes me question the "he regarded trading as a video game in which the object was to compile points not money" narrative. Yeah that is 100% lawyer speak haha. Smart move tbqh.
- crazypyro 7y ago
  He was trying to minimize his tax bill. He hired a tax consultant who ended up being fraudulent. This same consultant also introduced him to other fraudsters who extracted money from Sarao.
LeonM 7y ago
I am very unfamiliar with how the financial market works, maybe someone here on HN can answer this question: How can a single person with an internet connection (that's my understanding of the 'from his parents home' part) trigger an event that causes US markets to crash and wipe (albeit temporarily) billions of dollars? I mean, this guy was 'only' in it for the money. Could someone with much worse motives just trigger a crash like this on demand?
- RobRivera 7y ago
  In trading there is a queue for buys and sells, marked at quantity and price. This describes an attribute for that market called liquidity. I have, at a given timestamp, a queue of orders that must be fulfilled in accordance with a strict set of rules. By playing the rules and advertising bids with a lowlatency connection fast enough to impact the bid price, whilst canceling and not fulfilling that order, say 250us later. You can make a position to take advantage of that artificial price move that you caused. This is called spoofing.
  - LeonM 7y ago
    Thanks for the explanation! But the article says that Sarao did this from his parent's house. Would a residential internet connection be sufficient to perform such spoofing? The way you describe it, spoofing sounds like an easy way to make money, as long as you have enough capital and a fast internet connection, like with arbitrage. But there must be some limitation to this, right? Could anyone (like me) do spoofing and cause a flash crash?
    - RobRivera 7y ago
      It's possible to buy a colo at an exchange for $$$ and push to prod from the house. Algorithmic trading is...algorithmic. trade decisions are encoded into the algorithm, decisions based on market feed info such as last executed orders, volume, etc. The idea is you take a previous trading intraday execution data set, profile out volume per second, execution prices, etc. Then encode a proprietary datascience backed decision tree for dispatching buy sell messages. No human in theol loop.
mdg9149 7y ago
Yup
swishbroom 7y ago
Here's Matt Levine's analysis on his newsletter. The futures exchange wrote to Sarao on the day of the flash crash, telling him to stop spoofing, and he called them back "and told em to kiss my ass." https://www.bloomberg.com/opinion/articles/2015-04-21/guy-trading-at-home-caused-the-flash-crash https://www.bloomberg.com/opinion/articles/2015-04-21/guy-tr... https://www.bloomberg.com/opinion/articles/2020-01-15/it-s-not-insider-trading-if-the-president-does-it?sref=1kJVNqnU https://www.bloomberg.com/opinion/articles/2020-01-15/it-s-n... https://www.bloomberg.com/opinion/articles/2020-01-29/goldman-has-some-boring-plans https://www.bloomberg.com/opinion/articles/2020-01-29/goldma...
lonelappde 7y ago
"autism" here is just a ploy the defense is trying to weasel out of punishment, a soft phony "insanity" defense.
- alasdair_ 7y ago
  The guy is 41 years old and lives with his parents in the same bedroom he had as a kid. He has never been able to perform basic tasks like doing his own laundry or otherwise properly caring for himself. In addition, he spent essentially none of the money - the court case is clear on that point - and he was vulnerable enough that all of the funds were taken from him by fraudsters.
RickJWagner 7y ago
I think I see a movie on the horizon....
epicgiga 7y ago
Seems fair. All those guys who caused the 2008 crash, which actually hurt hundreds of millions of people, got sentenced too, so equality before the law and all that. Oh wait, actually they were "punished" by being bailed out with billions of public dollars. Well its all fun and games until the next revolution...
thecleaner 7y ago
So if investors and their smart algorithms act like dumb sheep how is it this guys fault ?

134 points by prostoalex 7y ago

acqq 7y ago

“helped trigger a U.S. stock market “flash crash”” is IMHO just an exaggeration typical for U.S. justice: “kid better cooperate with us or you’ll get millions of years in prison.” He earned 900k on that day. It doesn’t seem plausible.

noident 7y ago
Definitely an inflated claim by the prosecution. You cannot blame a major market event on the actions of a single individual. I would say in spite of that that this is one of those rare cases where the justice system comes back with a fair sentence.
trhway 7y ago
it seems that there were a lot of participants doing the same. Only one of them happened to be not a well connected hedge fund.

safog 7y ago

The autism bit aside, it looks like why they got him in the first place was that a technique he used (spoofing) was illegal in the US. Given he lives in England why was he extradited to the US? Is the summary that US has enough political power to have anyone who breaks US law wherever they are situated extradited and tried here?

twodave 7y ago
Ostensibly he was extradited because among the victims of the crime were U.S. corporations.
- mywittyname 7y ago
  Also, Britain also seems to give investors and banks undue influence over their judicial system. So it isn't so far fetched for them to throw a citizen to the wolves when it comes to committing crimes that impact the financial institutions of other nations, particularly the USA.
- goatinaboat 7y ago
  he was extradited because among the victims of the crime were U.S. corporations. I don’t know why this was downvoted. Recent events have proved that if the victim is a British motorcyclist, for example, extradition does not apply. https://www.bbc.co.uk/news/uk-england-northamptonshire-51228262 https://www.bbc.co.uk/news/uk-england-northamptonshire-51228...
  - lonelappde 7y ago
    That's not because the victim was a person. That's because the perpetrator was an elite -- a member (via marriage) of the regime that is protecting her.
seibelj 7y ago
Essentially yes. The SDNY especially has a long arm and uses it aggressively. The US is the world police, although other countries are responding now. I actually think this is a major reason why blockchain and stablecoins will succeed longterm in becoming global financial rails - the US has weaponized the dollar and the dollarized banking system, which is pushing alternatives to develop out of genuine need.
henryfjordan 7y ago
He was not just minding his own business in the UK doing something legal there but not legal in the US; He was interacting with US Markets, hence the US Jurisdiction.
- joshschreuder 7y ago
  Is the definition of US markets based on where the exchange is headquartered? The internet has made global crimes interesting, that's for sure. I would have thought the crime would have to be prosecuted in the criminal's home country given that's where he was doing the work from.
  - henryfjordan 7y ago
    Yes. The law cares about where you have a "presence". Since the exchange is headquartered in the US and you send your orders there, you are doing business in the US, making you subject to US laws. The law wants, amongst other things, justice for victims. So when your victims are in some country, expect to be tried there.
jessriedel 7y ago
With many exceptions, don't most developed countries respect each other's laws? Certainly, if someone commits a traditional crime (burglary, assault, etc.) and flees to another country, they are usually extradited. In the modern world where you can commit electronic crimes without being physically present, it's harder to compile enough evidence against the accursed remotely to justify extradition, but it certainly happens regularly. https://securityboulevard.com/2018/04/do-cybercriminals-ever-get-extradited/ https://securityboulevard.com/2018/04/do-cybercriminals-ever...
- deleted 7y ago
  [deleted]
btilly 7y ago
He was extradited to the US because there is an extradition treaty that gives the US the power to extradite people from the UK for meeting a reasonable suspicion test that they committed a crime in the US that is a crime in both countries and carries a sentence of at least a year. The treaty is reciprocal. The UK has an equivalent right with respect to people in the US who committed a crime in the UK who meet a probable cause test. An independent review concluded that the two tests used in the two countries are worded differently but effectively equivalent.
- pjc50 7y ago
  .. although this doesn't apply to everyone, a cause of some recent controversy: https://apnews.com/d48c57507ef7e627f05afb95c2a61128 https://apnews.com/d48c57507ef7e627f05afb95c2a61128
  - btilly 7y ago
    As far as I know, this is the first UK extradition request to be denied by the USA, while the UK has denied at least 10 extradition requests to the USA. My information is from https://uk.usembassy.gov/our-relationship/policy-history/the-u-s-uk-extradition-treaty/frequently-asked-questions-on-the-us-uk-extradition-relationship/ https://uk.usembassy.gov/our-relationship/policy-history/the.... Check the section on why it is easier to extradite in one direction versus the other. (Which hasn't yet been updated to include this refusal.)
    - jedberg 7y ago
      The UK won't extradite for any crime that carries the death penalty, because they believe the death penalty is inhumane. I believe that accounts for all of their denials.
      - btilly 7y ago
        Not quite all. There was also the case of Gary McKinnon whose extradition was denied because the UK believed he would commit suicide if extradited.
rhacker 7y ago
I AM totally confused by this as well. We can't have it both ways. Let's think about this in a COMPLETELY different perspective. Take elections as an example. Our 2016 elections were apparently never hacked, but there's a lot of conversation going on right now about "Russian Interference" but we're not specifically arresting Russians are we? So what makes it OK for someone in a country we don't have extradition treaties with to just let them off the hook vs a country we do? In other words, the world is TOTALLY BONKERS. I mean specifically, am I breaking a law in the next sentence in China and should be arrested and put in a prison camp in CHINA for this: So this happened: https://en.wikipedia.org/wiki/1989_Tiananmen_Square_protests https://en.wikipedia.org/wiki/1989_Tiananmen_Square_protests
- gen3 7y ago
  We actually do nab people who break the law in countries we can’t extradite from. People identified working in APT (advanced persistent threat) groups get labeled and watched, then grabbed when they travel to a country where the USA or affiliated can extradite. It normally happens when they go somewhere warm for a vacation.
  - ryanmercer 7y ago
    > then grabbed when they travel to a country where the USA or affiliated can extradite. And some countries, Israel for example, have actually sent assets to other countries to flat out kidnap and smuggle them out. The (probably) most high profile example of this being the abduction, confinement, and smuggling of Adolf Eichmann by Shin Bet and Mossad personnel. There are films about this, one being Operation Finale. Other countries have done this to varying levels, including the United States. Some can be found starting at this point in the extraordinary rendition wiki entry https://en.wikipedia.org/wiki/Extraordinary_rendition#Historical_instances https://en.wikipedia.org/wiki/Extraordinary_rendition#Histor...
  - markdown 7y ago
    > We actually do nab people You've actually escalated to assassinating people (ref: Soleimani)
OJFord 7y ago
That's a good way of putting it, because in a recent manslaughter case the US citizen (driving on the wrong side of the road) flew home on diplomatic immunity (a familial extension, not even the diplomat herself) and the US has refused extradition. I think the immunity was eventually deemed not to apply (or at least to be questionable) but even if not there was precedent of a Briton's immunity being waived for extradition to America; a favour not repaid in this case. So yes, 'political power' indeed.
james-imitative 7y ago
> Given he lives in England why was he extradited to the US? This scares me a great deal. Totally bonkers totalitarianism from a rogue state.
- edm0nd 7y ago
  The UK is a CCTV surveillance state and part of the Five Eyes intelligence alliance tho so not like it's any better.
mnm1 7y ago
Yes, exactly. This guy never left the uk, yet he committed a us crime? If China had this power they could extradite almost every single American who watches porn. The real fallacy is believing that laws have reason and logic behind them, that they are fair. Once you go down that path, you're done for. Once you realize that laws have no logic and their enforcement even less, you realize most criminals, like the one convicted in this story, just happen to be unlucky. Whether they actually harmed society is irrelevant and usually unknown. This is a perfect example of that. The machine that goes by the name "justice" is anything but and will chew out and spit anyone who gets in its way, regardless of facts, what happened, or even laws. The only sane thing is to stay out of its way, but once caught within, nothing matters. Clearly, this sets an expectation that if you live in a country with extradition treaties with the US, you better be rich enough to afford a US lawyer or smart enough to understand all of its countless number of laws on every level. In other words, you just need to do something impossible. Surely that shouldn't be a problem should it?
- Mirioron 7y ago
  >This guy never left the uk, yet he committed a us crime? If China had this power they could extradite almost every single American who watches porn. Extradition usually requires it to be a crime in both countries. Ironically, due to obscenity laws, it might actually be possible to do it over porn in some edge cases. >Clearly, this sets an expectation that if you live in a country with extradition treaties with the US, you better be rich enough to afford a US lawyer or smart enough to understand all of its countless number of laws on every level. Unfortunately, this isn't even new. The case of Kim Dotcom shows just how ridiculously far US "law enforcement" can go at the behest of organizations such as MPAA/RIAA.

crazypyro 7y ago

This is a fall guy for the flash crash. Yeah, he was spoofing orders, but so were a bunch of other people. Read the SEC report on the flash crash. Interestingly, he also lost his entire $50 million fortune to a bunch of terrible investments, including some downright frauds. Related article (goes into details about how he lost his money): https://www.livemint.com/Money/TYUUtwYOj0VIPhFFyLICQM/How-flash-crash-trader-Navinder-Singh-Sarao-went-from-genius.html https://www.livemint.com/Money/TYUUtwYOj0VIPhFFyLICQM/How-fl...

crazypyro 7y ago
Here's the SEC report I mentioned. https://www.sec.gov/news/studies/2010/marketevents-report.pdf https://www.sec.gov/news/studies/2010/marketevents-report.pd...

etaioinshrdlu 7y ago

Incredible that it has taken 10 years for this case to be resolved. Still, he was only charged 5 years after the event apparently. He caused the market to tank by billions of value but he only made $900k. It is not like billions of dollars of value are destroyed when investors sell stock. It sounds like the market had a crash as they tend to sometimes do and in this case the authorities decided it was this guy who did it! I think that analysis is quite tenuous. Anyone who sold stock participated in the crash. It seems nuts to try to assign blame.

im3w1l 7y ago
Yeah, how much the market tanks is fairly irrelevant since it's just a paper loss and will pop right back. More interesting is how much money various actors made/lost.
- aldanor 7y ago
  Market is a zero sum game (less the transaction costs), if someone lost then someone won. It's just those who lost are the ones who have big mouths, wallets and clients
  - frockington1 7y ago
    That's not how the market works. It is not zero sum. An easy counter point is dividend payouts.
    - aldanor 7y ago
      On the intraday scale less the transaction costs and dividend payouts. Trades are trades, if one party buys the other party sells and vice versa; there's always two sides.
      - yellowstuff 7y ago
        I don’t follow. If a stock keeps going up a share could change hands 10 times in a day, with 9 traders having positive realized PNL and 1 trader having positive unrealized PNL.

kyleblarson 7y ago

Clearly he's a fall guy, everyone was spoofing orders. This guy is likely a hero over on r/wallstreetbets.

aldanor 7y ago
People are spoofing orders on big exchanges today, without even trying hard to cover it. If you have access to tick level market data and a bit of time you can find clear spoofing patterns fairly easily. Not on that scale, but enough to make money to pay some bonuses for sure
- ianai 7y ago
  I wonder if that’s contributing to what seems like a market that can’t go down.
  - joejerryronnie 7y ago
    There’s just not many other places to put your money to work right now.
james-imitative 7y ago
Agreed.

mellosouls 7y ago

I'm not saying it isn't the case here, I've no idea (and the little I've read of his backstory is believably indicative), but this autism or Asperger's defence seems to be being raised every time a hacker gets arrested. It seems to be becoming the new "depression" in leniency arguments hitting the headlines, at least for tech related miscreants.

dmix 7y ago
I’ve watched plenty of prison TV shows and it would indeed be a far worse punishment for such a person and should very much be considered seriously by the courts in sentencing and bail hearings. >> His lawyers said the time Sarao spent in jail in Britain was "unbearable" because of his autism, saying it amounted to "a torture of sensory stimulation, sleep deprivation and forced socialization," and that he became suicidal. They said they were concerned that Sarao may not be able to survive another stint behind bars. His autism is clearly not on the mild side of the spectrum. He lives at home with his mom even as an adult and rarely leaves his room. The courts are entirely capable of understanding this context, compared to say someone with a mild form of autism who can still be functionally social in forced situations. Not to mention when considering intent and motivation behind the crime (which a severe case of autism can no doubt play a role) during sentencing plus their willingness to accept fault. But ultimately this person also returned $12M in funds me made from the loophole, was a first time offender with a stable future, and helped them catch other nefarious traders. So even without the autism stuff he had a very good argument against any prison time.
- mellosouls 7y ago
  Agree with most of that, but I'm commenting on what appears to be a trend in defences, at least in ones I recall from the headlines.
  - dylz 7y ago
    I wouldn't be surprised if it was more of a trend on the demographic that commits that type of crime too...

grandridge 7y ago

If anyone thinks this guy triggered the flash crash, ive got some stuff I want to sell you

thanatropism 7y ago

I feel like "autistic" may be the sole case in which wide (and improper) use as metaphor -- compare "crippled" -- does harm the neurodiverse.

samatman 7y ago
I disagree that it's the sole case, and also fail to see the relevance: Sarao is autistic, according to his own defense attorneys, and y'know, he probably is. It's kind of a sensational thing to add to a headline, but that's how headlines have always worked.

segmondy 7y ago

I think the real issue not addressed is that the system is so flawed, that a "rogue trader" could mess with the market. Let's imagine the typical US villain, Russia, North Korea, blah, blah. Let's say they have a few of their folks figure out weaknesses in the trading system then trade and then trigger a bunch of flash crashes everyday for a week or more. What will that do the market? How much billions would be lost?

partiallypro 7y ago
The fact that it was only a flash crash and not a crash, I think actually shows the strength of the system. No one really panicked. If a flash crash happened every week, they would just slow down trades and push more to specialists. I don't think it would be as catastrophic as one might think. It would be a minor shake up.
- andreilys 7y ago
  Tell that to all the traders whose stop losses were triggered due to flash crashes
  - samatman 7y ago
    I'm pretty sure he's not saying a flash crash is harmless, just that it's less harmful than plunging the economy into a worldwide recession.
  - ycombobreaker 7y ago
    that value wasn't "lost" from a holistic sense, but transfered to the counterparty. It's a good argument for why stop orders suck, though. the triggering mechanism is too easy to spoof in volatile/illiquid conditions.
  - scarejunba 7y ago
    Sure, I will. That's the risk of a stop loss, man. TANSTAAFL. The country doesn't lose anything because the value is transferred to whoever takes the other side.

onetimemanytime 7y ago

I guess they had to charge him and then agree to no jail. But still, I wonder if he really knew right from wrong. (A child can pull the trigger that kills the person, but maybe he was told that pulling the trigger will make the person laugh...or whatever.)

TheOperator 7y ago
Sure he did he's not stupid he understands fucking with the market has effects on people. Autistic people have a different sense of morality. Acting like an autistic genius can't understand that doing illegal things which contributes to the stock market crashing for the sake of profit is bad... Is mostly infantilizing. I mean his lawyer argued that but his lawyer is trying to exploit people like yourself.
- somebodythere 7y ago
  I'm not convinced that the stock market crashing (briefly, even) is inherently bad.
- onetimemanytime 7y ago
  Are you a doctor...and is he your patient?
  - TheOperator 7y ago
    The person in the story may not be my patient but I've been around the block enough times to understand WHY it is being thought that he is incapable of moral reasoning. I can speak to that subject without being a doctor. A doctor also in all honesty would almost certainly have less expertise in the subject than myself unless they were psychologists or similar. I feel compelled to speak on the subject because the general attitude that autistic people are fundamentally amoral, fundamentally incapable of knowing right from wrong leads to stigma and mistreatment while not actually being true. The very idea that you have to consult a doctor to judge if an autistic person, not the highest functioning but far from the lowest, is capable of moral reasoning is an idea that leads to stigma and "othering" and exclusion and dehumanization. If I come off as aggressive it's because I see your beliefs as personally threatening.

james-imitative 7y ago

> Before his own indictment, Sarao himself lost millions in assets to fraudsters who found him uniquely gullible and easy to cheat, his lawyer said. The irony is that he had millions in assets in the first place. Lol.

CRUDite 7y ago

If you read his reply / notes to the sec, he states how he was able to place orders without being front run. He asked developers to amend sierra chart. As a result, if placing a large contract order, rather than see price tick away from it he got instant fills. Ive zero doubt this is why he was fingered. Taking from the hf funds.. who think they have some right to impose a defacto tobin tax on transactions and justify it by calling themselves "liquidity providers!" He is guilty of spoofing, but the flood is caused by bots, or when they stop playing. He mentions his networth was constructed mostly over 50 days. On ' normal days ' you have to contend with smaller ranges where entries are key and those sort of intant fills are a massive advantage. Of course since he documented it the cat got out of the bag, many that had used this method were super annoyed! Bitmex seems to be the new wild west these days, all those techniques are used and more with 0 accountability

jb775 7y ago
Can you post a link to his reply/notes to the SEC?
- crazypyro 7y ago
  I can't find the original source on bloomberg, but this includes his emails to CTFC (the relevant regulator for e-mini futures) https://www.businessinsider.com/emails-sent-by-trader-navinder-sarao-2015-4 https://www.businessinsider.com/emails-sent-by-trader-navind...
frandroid 7y ago
> Taking from the hf funds.. who think they have some right to impose a defacto tobin tax on transactions You just blew my mind there. Of course!
thebruce87m 7y ago
Can some turn this in to non financial speak so that I can follow it? It sounds interesting but I don’t understand what he did.

jb775 7y ago

I'm surprised this article doesn't mention the lengths he went to hide his money using shell companies. Makes me question the "he regarded trading as a video game in which the object was to compile points not money" narrative. (on the flipside, if I ever get arrested for manipulating markets, I'm hiring this guy's lawyer) Per the official criminal complaint document: Around the time of the Flash Crash, SARAO took significant steps to protect his assets. In late April 2010, SARAO established a new entity, Nav Sarao Milking Markets Limited, which was incorporated in Nevis. SARAO appears to have created this company as part of a tax avoidance strategy pursuant to which he also established, in 2012, International Guarantee Corporation, incorporated in Anguilla.[1] [1] https://www.justice.gov/sites/default/files/opa/press-releases/attachments/2015/04/21/sarao_criminal_complaint.pdf https://www.justice.gov/sites/default/files/opa/press-releas...

jedberg 7y ago
> SARAO appears to have created this company as part of a tax avoidance strategy This fits with the description of getting more points. After he got the points, he wanted to keep more of them, so he figured out a way to do that.
edm0nd 7y ago
>Makes me question the "he regarded trading as a video game in which the object was to compile points not money" narrative. Yeah that is 100% lawyer speak haha. Smart move tbqh.
crazypyro 7y ago
He was trying to minimize his tax bill. He hired a tax consultant who ended up being fraudulent. This same consultant also introduced him to other fraudsters who extracted money from Sarao.

LeonM 7y ago

I am very unfamiliar with how the financial market works, maybe someone here on HN can answer this question: How can a single person with an internet connection (that's my understanding of the 'from his parents home' part) trigger an event that causes US markets to crash and wipe (albeit temporarily) billions of dollars? I mean, this guy was 'only' in it for the money. Could someone with much worse motives just trigger a crash like this on demand?

RobRivera 7y ago
In trading there is a queue for buys and sells, marked at quantity and price. This describes an attribute for that market called liquidity. I have, at a given timestamp, a queue of orders that must be fulfilled in accordance with a strict set of rules. By playing the rules and advertising bids with a lowlatency connection fast enough to impact the bid price, whilst canceling and not fulfilling that order, say 250us later. You can make a position to take advantage of that artificial price move that you caused. This is called spoofing.
- LeonM 7y ago
  Thanks for the explanation! But the article says that Sarao did this from his parent's house. Would a residential internet connection be sufficient to perform such spoofing? The way you describe it, spoofing sounds like an easy way to make money, as long as you have enough capital and a fast internet connection, like with arbitrage. But there must be some limitation to this, right? Could anyone (like me) do spoofing and cause a flash crash?
  - RobRivera 7y ago
    It's possible to buy a colo at an exchange for $$$ and push to prod from the house. Algorithmic trading is...algorithmic. trade decisions are encoded into the algorithm, decisions based on market feed info such as last executed orders, volume, etc. The idea is you take a previous trading intraday execution data set, profile out volume per second, execution prices, etc. Then encode a proprietary datascience backed decision tree for dispatching buy sell messages. No human in theol loop.

mdg9149 7y ago

Yup

swishbroom 7y ago

Here's Matt Levine's analysis on his newsletter. The futures exchange wrote to Sarao on the day of the flash crash, telling him to stop spoofing, and he called them back "and told em to kiss my ass." https://www.bloomberg.com/opinion/articles/2015-04-21/guy-trading-at-home-caused-the-flash-crash https://www.bloomberg.com/opinion/articles/2015-04-21/guy-tr... https://www.bloomberg.com/opinion/articles/2020-01-15/it-s-not-insider-trading-if-the-president-does-it?sref=1kJVNqnU https://www.bloomberg.com/opinion/articles/2020-01-15/it-s-n... https://www.bloomberg.com/opinion/articles/2020-01-29/goldman-has-some-boring-plans https://www.bloomberg.com/opinion/articles/2020-01-29/goldma...

lonelappde 7y ago

"autism" here is just a ploy the defense is trying to weasel out of punishment, a soft phony "insanity" defense.

alasdair_ 7y ago
The guy is 41 years old and lives with his parents in the same bedroom he had as a kid. He has never been able to perform basic tasks like doing his own laundry or otherwise properly caring for himself. In addition, he spent essentially none of the money - the court case is clear on that point - and he was vulnerable enough that all of the funds were taken from him by fraudsters.

RickJWagner 7y ago

I think I see a movie on the horizon....

epicgiga 7y ago

Seems fair. All those guys who caused the 2008 crash, which actually hurt hundreds of millions of people, got sentenced too, so equality before the law and all that. Oh wait, actually they were "punished" by being bailed out with billions of public dollars. Well its all fun and games until the next revolution...

thecleaner 7y ago

So if investors and their smart algorithms act like dumb sheep how is it this guys fault ?