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Fair Value Measurements
 12 Months Ended
Dec. 31, 2023
Fair Value Measurements [Abstract]  
Fair Value Measurements

4. Fair Value Measurements

The fair value of financial instruments is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. ASC 820, Fair Value Measurement, establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows:

 

Level 1

  

—

  

Quoted prices for identical instruments in active markets.
   

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 years ended December 31, 2023 and 2022, there were no transfers between Levels 2 and 3.

 

December 31, 2023
   

Total

  

Level 1

  

Level 2

  

Level 3

Assets:

                

Recurring fair value measurements:

                

Cash equivalents

  

$

50,226

  

$

50,226

  

$

—

  

$

—

Financial instruments owned, at fair value:

  

 

    

 

    

 

    

 

  

ETFs

  

 

35,181

  

 

35,181

  

 

—

  

 

—

Pass-through GSEs

  

 

10,240

  

 

—

  

 

10,240

  

 

—

Other assets—seed capital (WisdomTree Digital Funds):

  

 

    

 

    

 

    

 

  

U.S. treasuries

  

 

5,007

  

 

—

  

 

5,007

  

 

—

Equities

  

 

6,337

  

 

6,337

  

 

—

  

 

—

Fixed income

  

 

1,957

  

 

1,008

  

 

949

  

 

—

Total

  

$

108,948

  

$

92,752

  

$

16,196

  

$

—

Non-recurring fair value measurements:

  

 

    

 

    

 

    

 

  

Fnality International Limited—Series B-1 Preference Shares(1)

  

 

9,684

  

 

—

  

 

—

  

 

9,684

Other investments(2)

  

 

—

  

 

—

  

 

—

  

 

—

Total

  

$

9,684

  

$

—

  

$

—

  

$

9,684

​(1)     Fair value determined on October 31, 2023

(2)     Fair value determined on September 30, 2023

 

December 31, 2022
   

Total

  

Level 1

  

Level 2

  

Level 3

Assets:

                

Recurring fair value measurements:

                

Cash equivalents

  

$

930

  

$

930

  

$

—

  

$

—

Financial instruments owned, at fair value:

  

 

    

 

    

 

    

 

  

ETFs

  

 

23,772

  

 

23,772

  

 

—

  

 

—

U.S. treasuries

  

 

2,980

  

 

2,980

  

 

—

  

 

—

Pass-through GSEs

  

 

96,837

  

 

23,290

  

 

73,547

  

 

—

Fixed income

  

 

885

  

 

—

  

 

885

  

 

—

Other assets—seed capital (WisdomTree Digital Funds):

  

 

1,765

  

 

—

  

 

1,765

  

 

—

Investments in Convertible Notes

  

 

    

 

    

 

    

 

  

Securrency, Inc.—convertible note (Note 7)

  

 

14,500

  

 

—

  

 

—

  

 

14,500

Fnality International Limited—convertible note (Note 7)

  

 

6,921

  

 

—

  

 

—

  

 

6,921

Total

  

$

148,590

  

$

50,972

  

$

76,197

  

$

21,421

Non-recurring fair value measurements:

  

 

    

 

    

 

    

 

  

Other investments(1)

  

$

312

  

$

—

  

$

—

  

$

312
   

 

    

 

    

 

    

 

  

Liabilities:

  

 

    

 

    

 

    

 

  

Recurring fair value measurements:

  

 

    

 

    

 

    

 

  

Deferred consideration (Note 9)

  

$

200,290

  

$

—

  

$

—

  

$

200,290

​(1)     Fair value determined on May 10, 2022

Recurring Fair Value Measurements - Methodology

Cash Equivalents (Note 3) – 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.

Financial instruments owned (Note 5) – Financial instruments owned are investments in ETFs, pass-through GSEs, U.S. treasuries, equities and fixed income. ETFs, U.S. treasuries and equities 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 fixed income includes 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 table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:

These instruments consist of the following:

 

Years Ended
   

December 31,
2023

  

December 31,
2022

Investments in Convertible Notes (Note 7):

        

Beginning balance

  

$

21,421

  

$

—

Purchases

  

 

11,228

  

 

21,863

Settlements

  

 

(28,818)

  

 

—

Conversions(1)

  

 

(9,684)

  

 

—

Net realized gains/(losses)(2)

  

 

5,853

  

 

(442)

Ending balance

  

$

—

  

$

21,421

Deferred Consideration (Note 7):

  

 

    

 

  

Beginning balance

  

$

200,290

  

$

228,062

Net realized losses(3)

  

 

6,069

  

 

17,108

Net unrealized gains(4)

  

 

(61,953)

  

 

(27,765)

Settlements

  

 

(144,406)

  

 

(17,115)

Ending balance

  

$

—

  

$

200,290

​(1)     The Fnality convertible notes converted into Series B-1 Preference Shares on October 31, 2023 (Note 7).

(2)     Recorded in impairments and other losses, net in the Consolidated Statements of Operations.

​(3)     Recorded as contractual gold payments expense in the Consolidated Statements of Operations.

​(4)     Recorded as gain on revaluation/termination of deferred consideration—gold payments in the Consolidated Statements of Operations.