EQUITY SECURITIES

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

6. EQUITY SECURITIES

Our equity securities accounted for under the equity method under ASC 323 include equity securities in which we can exercise significant influence, but not control, over these entities through holding more than a 20% voting interest in the entity. During the nine months ended September 30, 2022, we completed our investment of an additional $15 million in tZERO through their Series B financing round led by the Intercontinental Exchange. We also invested $3.9 million in SpeedRoute, LLC ("SpeedRoute"), a former subsidiary of tZERO, which provides connectivity to tZERO's registered broker-dealer clients to U.S. equity exchanges and off-exchange sources of liquidity. The following table includes our equity securities accounted for under the equity method and related ownership interest as of September 30, 2022:


			Ownership interest
Medici Ventures, L.P.			99%
tZERO Group, Inc.			29%
SpeedRoute, LLC			49%

The carrying amount of our equity method securities was $311.0 million at September 30, 2022, which is included in Equity securities on our consolidated balance sheets, of which $93.0 million is valued under the fair value option (tZERO and SpeedRoute). These investments are valued using Level 3 inputs, which represents 27.0% of assets measured at fair value. For our investments in Medici Ventures, tZERO, and SpeedRoute there is no difference in the carrying amount of the assets and liabilities and our maximum exposure to loss, and there is no difference between the carrying amount of our investment in Medici Ventures and the amount of underlying equity we have in the entity's net assets.

The following table summarizes the net loss recognized on equity method securities recorded in Other expense, net in our consolidated statements of operations (in thousands):


	Three months ended September 30, 2022		Nine months ended September 30, 2022
Net loss recognized on our proportionate share of the net loss of our equity method securities	$	(17,231)	$	(20,979)
Decrease in fair value of equity method securities held under fair value option	(29,413)		(28,248)

Regulation S-X Rule 10-01(b)(1)

In accordance with Rule 10-01(b)(1) of Regulation S-X, which applies to interim reports on Form 10-Q, the Company must determine if its equity method investees are considered "significant subsidiaries". Summarized income statement information of an equity method investee is required in an interim report if the significance criteria are met as defined under SEC guidance. For the period ended September 30, 2022, this threshold was met for the Company's equity investment in tZERO.

The following is unaudited summarized financial information for tZERO (in thousands):


	Three months ended September 30, 2022		Nine months ended September 30, 2022
Results of Operations
Revenues	$	732	$	2,292
Pre-tax loss	(19,292)		(32,739)
Net loss	(19,362)		(32,558)