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Investments | 3 Months Ended
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Mar. 31, 2023
Schedule of Investments [Abstract] |
Investments | 7. Investments The following table sets forth the Company’s investments:
|  |  |  | March 31, 2023 |  |  | December 31, 2022 |
|  |  | Carrying Value |  |  | Cost |  |  | Carrying Value |  |  | Cost |
| Securrency, Inc.—Series A convertible preferred stock |  | $ | 3,588 |  |  | $ | 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 |  |  | 10,051 |  |  |  | 15,000 |  |  |  | 14,500 |  |  |  | 15,000 |
| Subtotal—Securrency, Inc. |  | $ | 19,139 |  |  | $ | 28,612 |  |  | $ | 28,488 |  |  | $ | 28,612 |
| Fnality International Limited—convertible note |  |  | 7,451 |  |  |  | 6,863 |  |  |  | 6,921 |  |  |  | 6,863 |
| Other investments |  |  | 312 |  |  |  | 250 |  |  |  | 312 |  |  |  | 250 |
|  |  | $ | 26,902 |  |  | $ | 35,725 |  |  | $ | 35,721 |  |  | $ | 35,725 |
Securrency, Inc. – Preferred Stock The Company owns approximately 22% (or 17 % 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 (“Securrency Series A Shares”) in December 2019 and 2,004,665 shares of Series B convertible preferred stock (“Securrency Series B Shares”) in March 2021. The Securrency 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 Securrency Series B Shares except that they have limited voting rights) and senior to that of the holders of the Securrency Series A Shares, which are senior to the holders of common stock. Otherwise, the Securrency Series A Shares and Securrency 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 Securrency Series A Shares and Securrency Series B Shares (together with the Securrency 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 Securrency Series A Shares (at any time on or after December 31, 2029) and 90 % of the Securrency 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 value and are not considered to be in-substance common stock. The investments are assessed for impairment and similar observable transactions on a quarterly basis. During the three months ending March, 31, 2023, the Company recognized an impairment of $4,900 on its Securrency Series A Shares to reduce the carrying value of its investment to fair value. Fair value was determined using the probability-weighted expected return method (“PWERM”), a valuation approach that estimates fair value assuming various outcomes. The table below presents the probability ascribed to potential outcomes used in the PWERM (classified as Level 3 in the fair value hierarchy):
|  | March 31, 2023 |
Conversion of Securrency Series A Shares upon a future equity financing |  |  | 33.3% |
Redemption of Securrency Series A Shares upon a corporate transaction |  |  | 33.3% |
Default |  |  | 33.4% |
There was no impairment recognized during the three months ended March 31, 2022 based upon a qualitative assessment. Securrency – Convertible Note In April and November 2022, the Company participated in a convertible note financing, making an aggregate investment of $15,000 in convertible notes of Securrency. In consideration for its investment, the Company was issued a 7% Convertible Promissory Note maturing on October 20, 2023. The notes are convertible into either common stock or a 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 of Securrency. The notes will convert 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 notes are 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, in accordance with the terms of the notes, 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 notes are accounted for at fair value. Fair value is determined by the Company using PWERM. During the three months ended March 31, 2023, the Company recognized an unrealized loss of $4,449 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:
|  | March 31, 2023 |  | December 31, 2022
Conversion of note upon a future equity financing |  | 33.3% |  | 60%
Redemption of note upon a corporate transaction |  | 33.3% |  | 25%
Default |  | 33.4% |  | 15%
Time to potential outcome (in years) |  | 0.56 |  | 0.33
Fnality International Limited – Convertible Note In February 2022, the Company participated in a convertible note financing, making an investment of £5,000 ($6,863) in convertible notes of 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 equity financing of Fnality. The note will convert 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 months ended March 31, 2023, the Company recognized a gain of $530 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:
|  | March 31, 2023 |  | December 31, 2022
Conversion of note upon a future financing round |  | 85% |  | 85%
Redemption of note upon a change of control |  | 10% |  | 10%
Default |  | 5% |  | 5%
Time to potential outcome (in years) |  | 0.08 |  | 0.25

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