By Kate Davidson

A former Federal Reserve employee was sentenced to 12 months' probation and issued a $5,000 fine for installing unauthorized bitcoin software on a Fed server, a government watchdog said Monday.

Nicholas Berthaume, who worked as a network systems communications analyst at the Fed board in Washington, installed the software so he could connect to an online bitcoin network to earn bitcoins, the Fed's inspector general said. The software was in place from about March 2012 to June 2014, according to a court document.

He was subsequently fired, the IG said, and struck a deal in October to plead guilty in U.S. District Court for the District of Columbia to one misdemeanor charge of unlawful use of government property, a charge that carried a fine of up to $100,000 and a year in jail. He received his sentence Friday.

A lawyer for Mr. Berthaume couldn't immediately be reached for comment.

Users earn bitcoins by allowing their systems' computing power to be part of the network that processes and verifies bitcoin transactions, the IG said. It wasn't clear how many bitcoins Mr. Berthaume was able to earn by connecting the Fed's servers to the network.

He also modified certain security safeguards so he could access the server from his home, the IG said. When investigators from the IG's office confronted him about the software, he denied any knowledge of it, then later remotely deleted it, the IG said.

The IG said the incident didn't result in a loss of Fed information, but the central bank has implemented "security enhancements" as a result of the case.

"This case demonstrates how my office will vigorously pursue Board employees who unlawfully abuse their positions and use government property for personal gain," Fed IG Mark Bialek said.

Write to Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

January 30, 2017 10:58 ET (15:58 GMT)

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