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DERIVATIVES (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Description of derivatives and related hedge accounting designation

The following outlines the Company’s derivatives and the related hedge accounting designation, as applicable:

Type of Derivative			Description of Derivative			Location of Host Contract and Derivative on Balance Sheets
Crypto asset borrowings(1)			The Company borrowed crypto assets that resulted in the obligation to deliver a fixed amount of crypto assets in the future.			Crypto asset borrowings
Accounts and loans receivable denominated in crypto assets			Accounts receivable denominated in crypto assets: The Company provided services for which, under the contract, the customer pays in crypto assets. The amount of crypto assets are fixed at the time of invoicing. Crypto asset loans receivable: The Company lends crypto assets to institutions. The amount of crypto assets are fixed at the time of loan origination. In both of the above cases, the right to receive fixed amounts of crypto assets consists of a receivable host contract and an embedded forward contract to purchase crypto assets.			Accounts and loans receivable, net of allowance
Other payables denominated in crypto assets			The Company entered into arrangements that result in the obligation to deliver a fixed amount of crypto assets in the future.			Accrued expenses and other current liabilities
Crypto asset futures(1)			The Company entered into short positions on futures contracts to minimize the exposure on the change in the fair value price of crypto assets held.			Accounts and loans receivable, net of allowance
Crypto assets pledged as collateral			The Company enters into certain borrowing arrangements that require the Company to post collateral in the form of crypto assets. If the lender has the right to use the crypto asset collateral, the Company presents the collateral pledged as a right to receive a fixed amount of crypto assets.			Prepaid expenses and other current assets

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(1)     For risk management purposes, the Company applies hedge accounting using these derivative instruments in qualifying fair value hedges to primarily hedge the fair value exposure of crypto asset prices.

Schedule of the notional amount of derivative contracts outstanding

The following table summarizes the notional amounts of derivative instruments outstanding, measured in U.S. dollar equivalents (in thousands):

			June 30,						December 31,
			2023						2022
Designated as hedging instrument
Crypto asset borrowings with embedded derivatives			$	119,478					$	80,999
Crypto asset futures(1)			—						136,230
Not designated as hedging instrument
Crypto asset borrowings with embedded derivatives			—						70,462
Accounts and loans receivable denominated in crypto assets			30,033						101,598
Other payables denominated in crypto assets			16,553						4,267
Crypto asset futures(1)			187						12,462
Crypto assets pledged as collateral			23,082						13,103
Other			1,050						—

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(1)    Derivative transactions are measured in terms of the notional amount; however, this amount is not recorded on the condensed consolidated balance sheets and is not, when viewed in isolation, a meaningful measure of the risk profile of the derivative instruments. The notional amount is generally not exchanged, but is used only as the underlying basis on which the value of exchange payments or settlement under these contracts are determined.

The following tables summarize information on derivative assets and liabilities that are reflected on the Company’s condensed consolidated balance sheets, by accounting designation (in thousands):

			Gross Derivative Assets																								Gross Derivative Liabilities
June 30, 2023			Not Designated as Hedges						Designated as Hedges						Total Derivative Assets												Not Designated as Hedges						Designated as Hedges						Total Derivative Liabilities
Crypto asset borrowings with embedded derivatives(1)			$	—					$	45					$	45											$	1,749					$	23,321					$	25,070
Accounts and loans receivable denominated in crypto assets			13,099						—						13,099												9						—						9
Other payables denominated in crypto assets			4,349						—						4,349												3,204						—						3,204
Crypto assets pledged as collateral			1,749						—						1,749												—						—						—
Other			1						—						1												2						—						2
Total fair value of derivative assets and liabilities			$	19,198					$	45					$	19,243											$	4,964					$	23,321					$	28,285

			Gross Derivative Assets																								Gross Derivative Liabilities
December 31, 2022			Not Designated as Hedges						Designated as Hedges						Total Derivative Assets												Not Designated as Hedges						Designated as Hedges						Total Derivative Liabilities
Crypto asset borrowings with embedded derivatives(1)			$	2,266					$	—					$	2,266											$	657					$	1,653					$	2,310
Accounts and loans receivable denominated in crypto assets			302						—						302												9,146						—						9,146
Other payables denominated in crypto assets			1,270						—						1,270												5,767						—						5,767
Crypto assets pledged as collateral			—						—						—												2,360						—						2,360
Total fair value of derivative assets and liabilities			$	3,838					$	—					$	3,838											$	17,930					$	1,653					$	19,583

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(1)    During the six months ended June 30, 2023, the fees on these borrowings ranged from 1.5% to 5.0%. During the six months ended June 30, 2022, the fees on these borrowings ranged from 0.0% to 7.5%. During the three and six months ended June 30, 2023, the Company incurred $1.2 million and $2.7 million of borrowing fees in crypto assets, respectively. During the three and six months ended June 30, 2022, the Company incurred $1.6 million and $3.0 million of borrowing fees in crypto assets, respectively. Borrowing fees are included in other operating expense (income), net in the condensed consolidated statements of operations.

The following amounts were recorded on the condensed consolidated balance sheets related to certain cumulative fair value hedge basis adjustments that are expected to reverse through the condensed consolidated statements of operations in future periods as an adjustment to other operating (income) expense, net (in thousands):

									Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Items
June 30, 2023			Carrying Amount of the Hedged Items						Active Hedging Relationships						Discontinued Hedging Relationships						Total
Crypto assets held			$	85,390					$	(27,214)					$	19,688					$	(7,526)

									Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Items
December 31, 2022			Carrying Amount of the Hedged Items						Active Hedging Relationships						Discontinued Hedging Relationships						Total
Crypto assets held			$	201,565					$	(562)					$	670					$	108

Schedule of gains (losses) recorded in income

Gains (losses) on derivative instruments recognized in other operating expense (income), net, in the Company’s condensed consolidated statements of operations were as follows (in thousands):

			Three Months Ended June 30, 2023																		Three Months Ended June 30, 2022
			Derivatives						Hedged Items						Income Statement Impact						Derivatives						Hedged Items						Income Statement Impact
Designated as fair value hedging instruments
Crypto asset borrowings with embedded derivatives			$	3,159					$	333					$	3,492					$	355,071					$	(356,416)					$	(1,345)
Crypto asset futures			5						—						5						15,678						(15,005)						673
Not designated as hedging instruments
Crypto asset borrowings with embedded derivatives			196						—						196						6,626						—						6,626
Accounts and loans receivable denominated in crypto assets			4,156						—						4,156						(5,350)						—						(5,350)
Other payables denominated in crypto assets			405						—						405						2,510						—						2,510
Crypto asset futures			455						—						455						1,181						—						1,181
Crypto assets pledged as collateral			(196)						—						(196)						—						—						—
Other			(443)						—						(443)						—						—						—
Total			$	7,737					$	333					$	8,070					$	375,716					$	(371,421)					$	4,295

			Six Months Ended June 30, 2023																		Six Months Ended June 30, 2022
			Derivatives						Hedged Items						Income Statement Impact						Derivatives						Hedged Items						Income Statement Impact
Designated as fair value hedging instruments
Crypto asset borrowings with embedded derivatives			$	(88,555)					$	48,933					$	(39,622)					$	360,069					$	(361,340)					$	(1,271)
Crypto asset futures			(43,111)						48,491						5,380						13,012						(12,262)						750
Not designated as hedging instruments
Crypto asset borrowings with embedded derivatives			196						—						196						6,626						—						6,626
Accounts and loans receivable denominated in crypto assets			47,080						—						47,080						(10,263)						—						(10,263)
Other payables denominated in crypto assets			844						—						844						2,510						—						2,510
Crypto asset futures			402						—						402						(511)						—						(511)
Crypto assets pledged as collateral			(196)						—						(196)						—						—						—
Other			(603)						—						(603)						—						—						—
Total			$	(83,943)					$	97,424					$	13,481					$	371,443					$	(373,602)					$	(2,159)

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Tabular disclosure of the location and amount of derivative instruments and nonderivative instruments designated as hedging instruments reported before netting adjustments, and the amount of gain (loss) on derivative instruments and nonderivative instruments designated and qualified as hedging instruments.

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Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

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