A British trader who was accused of contributing to a multibillion-dollar US stock market crash by playing the markets from his parents’ suburban London home should not serve any further prison time, a prosecutor has recommended.

Navinder Singh Sarao was labelled the “Hound of Hounslow” after being arrested in 2015 for supposedly making $40m (£27m) from his alleged role in the so-called “flash crash” of 2010.

His detention caused a sensation at the time because of the huge discrepancy between his high-stakes financial trading and his low-key lifestyle. Sarao was said to travel to work late so that he could buy off-peak tickets and only eat cut-price sandwiches.

Sarao spent four months in Wandsworth prison after his arrest and was extradited in 2016 to the US, where he admitted that he had been able to make at least $12.8m in illicit gains as a result of his scheme.

The trader, who a UK court heard has “severe Asperger syndrome”, has since been working with the US government on building cases against other suspected market cheats – a contribution that means prosecutors are no longer seeking to impose further prison time on him.

In a recommendation issued on Wednesday, Michael O’Neill, assistant chief of the fraud section of the US Department of Justice, said: “The defendant’s keen insights and explanations regarding both general and specific patterns of deceptive and manipulative trading have illuminated the government’s understanding of similar spoofing. As a result, he has substantially assisted and informed the government’s nationwide efforts to detect, investigate, and prosecute these crimes.

“Although the defendant’s cooperation with the government is complete, the government has no doubt that he would promptly make himself available to assist the government’s investigative and prosecutorial efforts in the future if asked.”

O’Neill concluded: “For the foregoing reasons, the government respectfully recommends that this court depart significantly below the advisory sentencing guidelines range. Specifically, the government agrees with the probation officer and the defendant that a sentence of time served would be appropriate.”

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

The DoJ alleged that Sarao “spoofed” financial markets by using trading software to place $200m of false trades. His actions were claimed to have contributed to flash crash of May 2010, when the Dow Jones industrial average plunged 600 points in five minutes and created havoc on Wall Street.

Spoofing involves placing – and then quickly cancelling – orders on a financial market in an attempt to deceive other traders about the market’s supply and demand, thus potentially moving prices in the trader’s favour.