Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 – Instruments whose significant drivers are unobservable.

The availability of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The tables below summarize the categorization of the Company’s assets and liabilities measured at fair value. During the three months ended March 31, 2022 and 2021 there were no transfers between Levels 2 and 3.


	March 31, 2022
	Total		Level 1		Level 2		Level 3
Assets:
Recurring fair value measurements:
Cash equivalents	$	449	$	449	$	—	$	—
Securities owned, at fair value
ETFs		16,035		16,035		—		—
Pass-through GSEs		115,858		24,503		91,355		—
Corporate bonds		1,953		—		1,953		—
Investments
Fnality International Limited – convertible note (Note 7)		6,700		—		—		6,700

Total	$	140,995	$	40,987	$	93,308	$	6,700

Liabilities:
Recurring fair value measurements:
Deferred consideration (Note 9)	$	245,177	$	—	$	—	$	245,177


	December 31, 2021
	Total		Level 1		Level 2		Level 3
Assets:
Recurring fair value measurements:
Cash equivalents	$	11,488	$	11,488	$	—	$	—
Securities owned, at fair value
ETFs		18,812		18,812		—		—
Pass-through GSEs		106,245		24,720		81,525		—
Corporate bonds		2,109		—		2,109		—

Total	$	138,654	$	55,020	$	83,634	$	—

Non-recurring fair value measurements:
Securrency, Inc. – Series A convertible preferred stock (1)		8,488		—		—		8,488

Liabilities:
Recurring fair value measurements:
Deferred consideration (Note 9)	$	228,062	$	—	$	—	$	228,062

(1)

Fair value of $8,488 and $8,349 determined on June 9, 2021 and March 8, 2021, respectively (Note 7).

Recurring Fair Value Measurements - Methodology

Cash Equivalents (Note

)

– These financial assets represent cash invested in highly liquid investments with original maturities of less than 90 days. These investments are valued at par, which approximates fair value, and are classified as Level 1 in the fair value

hierarchy.

Securities Owned (Note

)

– Securities owned are investments in ETFs, pass-through GSEs and corporate bonds. ETFs are generally traded in active, quoted and highly liquid markets and are therefore classified as Level 1 in the fair value hierarchy. Pricing of pass-through GSEs and corporate bonds include consideration given to collateral characteristics and market assumptions related to yields, credit risk and timing of prepayments and are therefore generally classified as Level 2. Pass-through GSE positions invested in through a fund structure with a quoted market price on an exchange are generally classified as Level 1.

Fair Value Measurements classified as Level 3

– The following tables presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:


	Three Months Ended March 31,
	2022			2021
Fnality International Limited – Convertible note (Note 7)
Beginning balance	$	—		$	—
Purchases		6,863			—
Net unrealized gains/(losses) (1)		(163	)		—

Ending balance	$	6,700		$	—

(1)

Recorded in other losses, net in the Consolidated Statements of Operations.


	Three Months Ended March 31,
	2022			2021
Deferred consideration (Note 9)
Beginning balance	$	228,062		$	230,137
Net realized losses (1)		4,450			4,270
Net unrealized losses/(gains) (2)		17,018			(2,832	)
Settlements		(4,353	)		(4,429	)

Ending balance	$	245,177		$	227,146

(1)

Recorded as contractual gold payments expense in the Consolidated Statements of Operations.

(2)

Recorded as (loss)/gain on revaluation of deferred consideration – gold payments in the Consolidated Statements of Operations.