By Nate Raymond

NEW YORK (Reuters) - An Australian man who moderated the discussion forums on the underground drug website Silk Road was sentenced to time served on Tuesday after already being in custody for 17 months.

Peter Nash, 42, dropped his head into his hands as U.S. District Judge Thomas Griesa in Manhattan announced the sentence, which came after he provided prosecutors information about his conduct and pleaded guilty.

"It's very gratifying that Peter can return home and be reunited with his fiancée and his family," Andrew Frisch, his lawyer, said outside of court.

The proceedings came just three days before a U.S. federal judge is set to sentence Ross Ulbricht, the creator of Silk Road who authorities say operated the website under the alias Dread Pirate Roberts. He faces up to life in prison.

Silk Road operated for more than two years, allowing users to anonymously buy drugs and other illicit goods using the digital currency bitcoin and generating over $214 million in sales in the process, prosecutors said.

Nash was one of a handful of staff members working on Silk Road at the time of Ulbricht's arrest the website's shutdown in October 2013, operating under the alias Samesamebutdifferent.

Nash, who also had worked for a support service for adults with mental disabilities, was charged in December 2013 along with two alleged site administrators, Andrew Jones and Gary Davis, and arrested in Australia.

After being extradited, he pleaded guilty in March to conspiracy to commit narcotics trafficking and money laundering, telling Griesa then that he became involved with Silk Road to buy drugs and for "social connections."

Nash at his plea said he never knew the real identity of Silk Road's operator, who asked him to moderate its discussion forums. Frisch said he used the $25,000 he earned to buy drugs.

"It was never my intention to cause upset or harm," Nash said in court Tuesday. "But needless to say that is what happened."

While Nash normally would face 10 years minimum in prison in light of his plea, that requirement was waived as Nash was a first-time, non-violent offender who provided information to prosecutors about his conduct.

Ulbricht, 31, was found guilty in February of charges including of conspiracy to commit drug trafficking, money laundering, computer hacking, and other charges.

Jones pleaded guilty in October. Davis is pending extradition in Ireland.

The case is U.S. v. Jones, U.S. District Court, Southern District of New York, No, 13-cr-950.

(Reporting by Nate Raymond in New York, editing by G Crosse)