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Investments | 9 Months Ended
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Sep. 30, 2022
Schedule of Investments [Abstract] |
Investments | 7. Investments The following table sets forth the Company’s investments:
|  | September 30, 2022 |  |  | December 31, 2021 |
|  | Carrying Value |  |  | Cost |  |  | Carrying Value |  |  | Cost |
Securrency, Inc.—Series A convertible preferred stock |  | $ | 8,488 |  |  | $ | 8,112 |  |  | $ | 8,488 |  |  | $ | 8,112 |
Securrency, Inc.—Series B convertible preferred stock |  |  | 5,500 |  |  |  | 5,500 |  |  |  | 5,500 |  |  |  | 5,500 |
Securrency, Inc.—convertible note |  |  | 5,844 |  |  |  | 5,000 |  |  |  | — |  |  |  | — |
Subtotal—Securrency, Inc. |  | $ | 19,832 |  |  | $ | 18,612 |  |  | $ | 13,988 |  |  | $ | 13,612 |
Fnality International Limited—convertible note |  |  | 6,195 |  |  |  | 6,863 |  |  |  | — |  |  |  | — |
Onramp Invest, Inc.—Series A-4 preferred stock |  |  | 312 |  |  |  | 250 |  |  |  | 250 |  |  |  | 250 |
|  | $ | 26,339 |  |  | $ | 25,725 |  |  | $ | 14,238 |  |  | $ | 13,862 |
Securrency, Inc. – Preferred Stock The Company owns approximately 22% (or 18% on a fully-diluted basis) of the capital stock of Securrency, Inc. (“Securrency”), a developer of institutional-grade blockchain-based financial and regulatory technology, issued as a result of strategic investments totaling $13,612. In consideration of such investments, the Company received 5,178,488 shares of Series A convertible preferred stock (“Series A Shares”) in December of 2019 and 2,004,665 shares of Series B convertible preferred stock (“Series B Shares”) in March of 2021. The Series B Shares contain a liquidation preference that is pari passu with shares of Series B-1 convertible preferred stock (which are substantially the same as the Series B Shares except that they have limited voting rights) and senior to that of the holders of the Series A Shares, which are senior to the holders of common stock. Otherwise, the Series A Shares and Series B Shares have substantially the same terms, are convertible into common stock at the option of the Company and contain various rights and protections including a non-cumulative 6.0% dividend, payable if and when declared by the board of directors of Securrency. In addition, the Series A Shares and Series B Shares (together with the Series B-1 convertible preferred stock) are separately redeemable, with respect to all of the shares outstanding of the applicable series of preferred stock (subject to certain regulatory restrictions of certain investors), for the original issue price thereof, plus all declared and unpaid dividends, upon approval by holders of at least 60% of the Series A Shares (at any time on or after December 31, 2029) and 90% of the Series B Shares (at any time on or after March 31, 2031). These investments are accounted for under the measurement alternative prescribed in ASC 321, as they do not have a readily determinable fair values and are not considered to be in-substance common stock. The investments are assessed for impairment and similar observable transactions on a quarterly basis. There was no impairment recognized during the three and nine months ended September 30, 2022 and the three months ended September 30, 2021 based upon a qualitative assessment. During the nine months ended September 30, 2021, the Company recognized a gain of $376 on its Series A Shares, which were re-measured to fair value upon the issuance of Securrency’s Series B Shares. Fair value was determined using the backsolve method, a valuation approach that determines the value of shares for companies with complex capital structures based upon the price paid for shares recently issued. Fair value is allocated across the capital structure using the Black-Scholes option pricing model. The table below presents the inputs used in the backsolve valuation approach (classified as Level 3 in the fair value hierarchy):
|  |  |  | Inputs |
|  |  | June 9, 2021 |  |  | March 8, 2021 |
| Expected volatility |  |  | 50% |  |  |  | 55% |
| Time to exit (in years) |  |  | 4.75 |  |  |  | 5.00 |
Securrency – Convertible Note In April 2022, the Company participated in a convertible note financing, making a $5,000 investment in Securrency. In consideration for its investment, the Company was issued a 7% Convertible Promissory Note maturing on April 21, 2023. The note is convertible into either Securrency’s common stock or the class of securities convertible into, exchangeable for, or conferring the right to purchase Securrency’s common stock that is issued in the event of a future equity financing at a conversion price equal to a discount of 25% (or, if applicable, a greater discount offered to other holders of convertible securities in such future equity financing round) to the lowest price paid per equity share issued in the future equity financing round. The note is redeemable upon the occurrence of a corporate transaction for an amount which is the greater of (i) the principal amount and all accrued interest and (ii) the amount that would be received had the note been converted to common stock immediately prior to the occurrence of the corporate transaction. At maturity, redemption or conversion may occur upon the election by the holders of a majority-in-interest of the aggregate principal amount of outstanding notes. If no such election is made, Securrency may elect to pay or convert the notes in its sole discretion. The note is accounted for at fair value. Fair value is determined by the Company using the probability-weighted expected return method (“PWERM”), a valuation approach that estimates the value of the note assuming various outcomes. During the three and nine months ended September 30, 2022, the Company recognized a gain of $565 and $844, respectively, when re-measuring the notes to fair value. The table below presents the probability ascribed to potential outcomes used in the PWERM (classified as Level 3 in the fair value hierarchy) and the time to exit:
|  |  |  | September 30, 2022 |
| Conversion of note upon a future equity financing |  |  | 85% |
| Redemption of note upon a corporate transaction |  |  | 10% |
| Default |  |  | 5% |
| Time to potential outcome (in years) |  |  | 0.25 |
Fnality International Limited – Convertible Note In February 2022, the Company participated in a convertible note financing, making a £5,000 ($6,863) investment in Fnality International Limited (“Fnality”), a company incorporated in England and Wales and focused on creating a peer-to-peer digital wholesale settlement ecosystem comprised of a consortium of financial institutions, offering real time cross-border payments from a single pool of liquidity. In consideration for its investment, the Company was issued a 5% Convertible Unsecured Loan Note maturing on December 31, 2023. The note is convertible into equity shares in the event of a future financing round at a conversion price equal to the lower of (i) a discount of 20% to lowest price paid per equity share issued pursuant to such future financing round and (ii) an amount paid per share subject to a pre-money valuation cap. Mandatory conversion may occur on or after the maturity date or, if earlier, in the event a future financing round has not been completed within a specified time from an initial closing of such financing round (“Long Stop Date”), upon the approval of holders of at least 75% of the outstanding notes. The note is also convertible, at the option of the Company, following the earlier of the maturity date or such Long Stop Date. The note is redeemable upon the occurrence of a change of control for an amount which is the greater of (i) the principal amount and all accrued interest and (ii) the amount that would be received had the note been converted to equity shares immediately prior to the occurrence of the change of control. Redemption may also occur on or after maturity or prior to maturity upon approval by holders of at least 50% and 75%, respectively, of the outstanding notes, or in connection with bankruptcy or other liquidation events. The note is accounted for at fair value. Fair value is determined by the Company using the PWERM and is also remeasured for changes in the British pound and U.S. dollar exchange rate. During the three and nine months ended September 30, 2022, the Company recognized a loss of $238 and $668, respectively, when re-measuring the notes to fair value. The table below presents the probability ascribed to potential outcomes used in the PWERM (classified as Level 3 in the fair value hierarchy) and the time to exit:
|  |  |  | September 30, 2022
| Conversion of note upon a future financing round |  | 85%
| Redemption of note upon a change of control |  | 10%
| Default |  | 5%
| Time to potential outcome (in years) |  | 0.25
Onramp Invest, Inc. – Preferred Stock In June 2021, the Company invested $250 in Onramp Invest, Inc. (“Onramp”), a technology company that provides access to crypto assets for registered investment advisers. In consideration for its investment, the Company was issued a Simple Agreement for Future Equity (“SAFE”), which provided the Company with the right to be issued certain shares of Onramp’s preferred stock in connection with Onramp’s future equity financing for preferred stock, at a 20% discount to the price per share issued in connection with such equity financing, subject to a pre-determined valuation cap. In May 2022, in connection with a Series A financing by Onramp, the Company’s SAFE was converted into shares of Series A-4 Preferred Stock, representing a small ownership interest in Onramp. The investment is accounted for under the measurement alternative prescribed in ASU 2016-01, as it does not have a readily determinable fair value and is not considered to be in-substance common stock. The investment is assessed for impairment and similar observable transactions on a quarterly basis. During the three and nine months ended September 30, 2022, the Company recognized a gain of $0 and $62, respectively, in connection with the conversion of the SAFE into Series A-4 Preferred Stock of Onramp. There was no impairment recognized during the three and nine months ended September 30, 2021 based upon a qualitative assessment.

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