Navinder Singh Sarao
Navinder Singh Sarao appeared before Westminster Magistrates' Court on WednesdaySource: Twitter

The former boss of the man accused of causing the "flash crash" in 2010 has described him as a "legend".

In an interview with Bloomberg TV, Paolo Rossi, the founder and owner of Futex, where Navinder Singh Sarao acquired his trading skills, said that his former trainee was a "very good trader making very good money". He also questioned whether a single lone trader operating from a west London suburb could have manipulated the US futures market in the ways alleged by prosecutors.

"Did Navinder Sarao cause the flash crash alone? No. It's not possible. Was he a contributing factor? Probably, but a million things were a contributing factor to the flash crash," said Rossi.

US regulators are alleging that 36-year-old Sarao helped to cause the temporary collapse five years ago in the US's S&P 500, the country's blue-chip corporate index.

Superstar trader

Sarao was granted conditional bail of £5m by Westminster Magistrates Court on Wednesday – though so far the bond has yet to be paid.

Discussing Sarao during the interview, Rossi said that he was "the kind of person that I believed would become legendary". Rossi added: "If he's found innocent of the allegations, then he will be the world's superstar trader. If he's found guilty, he'll become just another infamous trader."

Sarao's company accounts indicate that he could have made tens of millions of dollars by trading in futures contracts on the US stock market.

An analysis carried out for The Times newspaper demonstrated that the trader might have funds of more than £40m in offshore companies.

Former colleagues of Sarao have stated that he had been earning as much as £500,000 per annum through Futex.

Rossi acknowledged that Sarao's profits could have been very substantial. "It doesn't take much percentage points to move £500 million or a billion pounds' worth of positions to make the sums that you discuss," he said.