Until now US authorities have said it was likely a single trader was mainly responsible for the crash, which initially knocked 600 points off the Dow Jones - equivalent to US$850 billion ($1.1 trillion). The index fell almost 1000 points during the day, before recovering most of the loss, making it the biggest one-day point decline in the Dow's history.
He now faces extradition after being charged by the US Department of Justice and the US Commodity Futures Trading Commission (CFTC) with illegally manipulating the markets.
Aitan Goelman, director of enforcement at the CFTC, said Sarao had been "extremely active" before and during the incident. He said: "His conduct was at least significantly responsible for the order imbalance that in turn was one of the conditions that led to the Flash Crash."
Neighbours of Sarao said he was married with two children and lived quietly in a house opposite his parents' home, where his company, Nav Sarao Futures, was registered. His parents, Nachattar Singh Sarao and Darshaw Kaur Sarao, bought their house in 1982. Apart from a walled, well-maintained front garden, the pre-war semi is no different from any other in the street. One neighbour said: "They are a quiet family, they say hello and goodbye, but that's about it. The parents both work and their son lives opposite with his wife and two daughters. No one has ever suggested they are wealthy."
According to a statement filed in a Chicago court by Special Agent Gregory LaBerta of the FBI, Nav Sarao Futures made 26.7 million profit between 2010 and 2014, sometimes 500,000 in a single day.
It is alleged that Sarao "engaged in a massive effort to manipulate" the price of the E-mini S&P 500, one of the most popular financial markets, which includes household names such as Amazon and Boeing.
The regulator alleges that over five years, and as recently as April 6, he attempted to manipulate the market by a variety of "exceptionally large, aggressive and persistent spoofing tactics" - jargon for conning the market by placing false trades.
According to the FBI he placed massive sell orders to drive prices down, then cancelled before they were executed. The modification and cancellation of orders "occurred over the course of seconds, in multiple cycles that the trader repeats throughout the day". While the market was artificially depressed, "he exploited his manipulation to reap large trading profits by executing other, real orders". Some of his actions happened within milliseconds, the FBI says.
On one day in April 2010, he is alleged to have placed 2 million of orders, then modified them 1967 times to stay ahead of the market, before cancelling them. He is said to have repeated the technique 60 times that day, earning 550,000.
His profit on the day of the Flash Crash was 588,000, it is claimed.
When approached by US investigators, he denied using a computer programme to place trades, saying he had "always been good with reflexes", the court papers say.
A US judge has issued an order freezing the assets of Sarao, and his trading company. However, the US Department of Justice emphasised that the charges "are merely accusations, and the defendant is presumed innocent unless and until proven guilty".
Trader arrested
• Navinder Singh Sarao is accused of spoofing tactics - jargon for conning the market by placing false trades.
• FBI says he placed massive sell orders to drive prices down, then cancelled before they were executed.
• While the market was artificially depressed it is alleged he exploited his manipulation to reap large trading profits by executing other, real orders.
• Some of his actions happened within milliseconds, the FBI says.
