Credit default swaps are financial tools that help manage risk in the global financial system. They transfer the risk of a credit-risky asset between two parties. These instruments are widely used by investors and intermediaries for risk management and investment strategies. The article explores the credit derivative marketplace, discussing their applications, valuation, and control. It also highlights the negative impact of toxic credit derivatives, which played a role in the recent debt crisis. Toxic assets like mortgage-backed securities and credit default swaps led to significant losses for their holders.