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DERIVATIVES (Tables)
 9 Months Ended
Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Description of derivatives and related hedge accounting designation
The following outlines the Company’s derivatives:
Type of DerivativeDescription of DerivativeLocation of Host Contract and Derivative on Balance Sheets
Crypto asset borrowings
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
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
Foreign currency forward contractsThe Company entered into foreign currency forward contracts, with maturities of 12 months or less, to offset the foreign currency exchange risk of its assets and liabilities denominated in foreign currencies. These contracts are not designated as hedging instruments and reduce, but do not entirely eliminate, the impact of foreign currency exchange rate movements on the Company’s assets and liabilities.Prepaid expenses and other current assets/ Accrued expenses and other current liabilities
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):
September 30,December 31,
20232022
Designated as hedging instrument(1)
Crypto asset borrowings with embedded derivatives$51,149 $80,999 
Crypto asset futures(2)
7,889 136,230 
Not designated as hedging instrument
Crypto asset borrowings with embedded derivatives62,371 70,462 
Accounts and loans receivable denominated in crypto assets59,714 101,598 
Other payables denominated in crypto assets13,111 4,267 
Crypto asset futures(2)
13,012 12,462 
Crypto assets pledged as collateral— 13,103 
Other19,396 — 
__________________
(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.
(2)    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 AssetsGross Derivative Liabilities
September 30, 2023Not Designated as HedgesDesignated as HedgesTotal Derivative AssetsNot Designated as HedgesDesignated as HedgesTotal Derivative Liabilities
Crypto asset borrowings with embedded derivatives(1)
$2,752 $2,805 $5,557 $523 $769 $1,292 
Accounts and loans receivable denominated in crypto assets9,542 — 9,542 1,705 — 1,705 
Other payables denominated in crypto assets4,495 — 4,495 2,965 — 2,965 
Other403 — 403 63 — 63 
Total fair value of derivative assets and liabilities$17,192 $2,805 $19,997 $5,256 $769 $6,025 
Gross Derivative AssetsGross Derivative Liabilities
December 31, 2022Not Designated as HedgesDesignated as HedgesTotal Derivative AssetsNot Designated as HedgesDesignated as HedgesTotal 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 assets302 — 302 9,146 — 9,146 
Other payables denominated in crypto assets1,270 — 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 
__________________
(1)    During the nine months ended September 30, 2023, the fees on these borrowings ranged from 1.5% to 9.3%. During the nine months ended September 30, 2022, the fees on these borrowings ranged from 0.0% to 7.5%. During the three and nine months ended September 30, 2023, the Company incurred $0.7 million and $3.4 million of borrowing fees in crypto assets, respectively. During the three and nine months ended September 30, 2022, the Company incurred $0.9 million and $3.9 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
Carrying Amount of the Hedged ItemsActive Hedging RelationshipsDiscontinued Hedging RelationshipsTotal
September 30, 2023
Crypto assets held$56,564 $(52,047)$(1,796)$(53,843)
December 31, 2022
Crypto assets held$201,565 $(562)$670 $108 
Schedule of gains (losses) recorded in income
Gains (losses) on derivative instruments recognized in the Company’s condensed consolidated statements of operations were as follows (in thousands):
Three Months Ended September 30, 2023Three Months Ended September 30, 2022
DerivativesHedged ItemsIncome Statement ImpactDerivativesHedged ItemsIncome Statement Impact
Designated as fair value hedging instruments
Crypto asset borrowings with embedded derivatives(1)
$12,707 $(4,247)$8,460 $(211,110)$207,112 $(3,998)
Crypto asset futures(1)
1,329 (1,331)(2)225 (77)148 
Not designated as hedging instruments
Crypto asset borrowings with embedded derivatives(1)
(30)— (30)— — — 
Accounts and loans receivable denominated in crypto assets(1)
(8,466)— (8,466)(4,213)— (4,213)
Other payables denominated in crypto assets(1)
6,337 — 6,337 (2,367)— (2,367)
Crypto asset futures(1)
558 — 558 (566)— (566)
Foreign currency forward contracts(2)
— — — 22,935 — 22,935 
Crypto assets pledged as collateral(1)
196 — 196 — — — 
Other(1)
5,259 — 5,259 — — — 
Total$17,890 $(5,578)$12,312 $(195,096)$207,035 $11,939 
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2022
DerivativesHedged ItemsIncome Statement ImpactDerivativesHedged ItemsIncome Statement Impact
Designated as fair value hedging instruments
Crypto asset borrowings with embedded derivatives(1)
$(75,848)$44,686 $(31,162)$148,959 $(154,228)$(5,269)
Crypto asset futures(1)
(41,782)47,160 5,378 13,237 (12,339)898 
Not designated as hedging instruments
Crypto asset borrowings with embedded derivatives(1)
166 — 166 6,626 — 6,626 
Accounts and loans receivable denominated in crypto assets(1)
38,614 — 38,614 (14,476)— (14,476)
Other payables denominated in crypto assets(1)
7,181 — 7,181 143 — 143 
Crypto asset futures(1)
960 — 960 (1,077)— (1,077)
Foreign currency forward contracts(2)
— — — 22,935 — 22,935 
Other(1)
4,656 — 4,656 — — — 
Total$(66,053)$91,846 $25,793 $176,347 $(166,567)$9,780 
__________________
(1)Changes in fair value are recognized in other operating expense (income), net in the condensed consolidated statements of operations.
(2)Changes in fair value are recognized in other (income) expense, net, which partially offset gains and losses due to the remeasurement of certain foreign currency denominated assets and liabilities which are also recognized in other (income) expense, net in the condensed consolidated statements of operations.