Fair value is estimated based on a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs to valuation techniques into three broad levels whereby the highest priority is given to Level 1 inputs and the lowest to Level 3 inputs.

•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 market data.

•Level 3 - Valuations for instruments with inputs that are significant and unobservable, are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such instruments.

This hierarchy requires the use of observable market data when available. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Investments that are valued using NAV as a practical expedient are excluded from this hierarchy.

As of December 31, 2023 and March 31, 2023, the fair value of these investments using the NAV per share practical expedient was $302.8 million and $385.9 million, respectively. During the three months ended December 31, 2023 and 2022, gains of $7.4 million and $11.5 million, respectively, were recognized from changes in NAV, which are recorded within the investment income (loss), net, line item of our consolidated statements of comprehensive income (loss). During the nine months ended December 31, 2023 and 2022, a $7.9 million gain and $30.7 million loss, respectively, was recognized from changes in NAV, which is recorded within the investment income (loss), net, line item of our consolidated statements of comprehensive income (loss).


	As of December 31, 2023
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Public equity securities	$	4,210	$	—	$	—	$	4,210

Other equity interests	—		3,797		—		3,797
Debt securities available-for-sale, other	—		998		2,129		3,127
Liabilities:
Warrant liability	161		—		—		161
Prepaid forward liability	12		—		—		12


	As of March 31, 2023
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Public equity securities	$	8,837	$	—	$	—	$	8,837
Put options	3,991		—		—		3,991
Debt securities available-for-sale
Corporate debt securities (L Bonds)	—		73,822		—		73,822
Other debt securities	—		998		2,078		3,076
Liabilities:
Derivative liability	—		—		3,513		3,513


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Public equity securities:
Related party equity securities	$	—	$	(20,480)	$	(3,702)	$	(63,044)
Other public equity securities	(189)		3		(925)		(6)
Put options	—		(3,825)		(3,023)		(1,081)
Warrant liability	795		—		2,494		—
Prepaid forward liability	61		—		(12)		—
Derivative liability	—		1,275		1,581		5,078
Other equity securities and interests
Related party, with a readily determinable fair value(1)	(18,691)		—		(60,515)		—
Other, without a readily determinable fair value	—		(16)		(158)		2,952
Gain (loss) on financial instruments, net	$	(18,024)	$	(23,043)	$	(64,260)	$	(56,101)

(1) Includes realized net gains of $13.7 million related to the Company’s previously classified available-for-sale debt securities upon reclassification from accumulated other comprehensive income during the nine months ended December 31, 2023.

As of December 31, 2023, the fair value of these equity interests is calculated using quoted prices for similar instruments observed in the fixed income market and is classified as a Level 2 investment in the fair value hierarchy.

Corporate debt securities. As of March 31, 2023, the fair value of these debt securities is calculated using quoted spreads for similar instruments observed in the fixed income market and is classified as a Level 2 investment in the fair value hierarchy.

Other debt securities. The fair value of these debt securities is calculated using the market approach adjusted for the recoverability of the security. The following table provides quantitative information about the significant unobservable inputs used in the fair value measure of the Level 3 other debt securities (dollars in thousands):

Fair Value

Valuation Methodology

Unobservable Inputs

Range

Weighted Average

December 31, 2023

2,129

Market Approach

Enterprise value-to-revenue multiple

0.2x - 18.9x

1.80x

March 31, 2023

2,078

Market Approach

Enterprise value-to-revenue multiple

0.2x - 18.9x

1.74x


(Dollars in thousands)	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Beginning balance	$	2,079	$	2,468	$	2,078	$	3,000
Gains (losses) recognized in accumulated other comprehensive income (loss)(1)	50		34		51		(498)
Ending balance	$	2,129	$	2,502	$	2,129	$	2,502

The fair value of the contingent interest feature derivative liability, as discussed in Note 7, is estimated using industry standard valuation models. Level 3 inputs were utilized to value the expected future cash flows from the portfolio held by the Customer ExAlt Trust and included the use of present value techniques employing cash flow estimates and incorporated assumptions that marketplace participants would use in estimating fair values. Specifically, the model includes assumptions related to (i) equity market risk premiums, (ii) alternative asset beta to public equities, (iii) NAVs, (iv) volatilities, (v), distribution rates, and (vi) market discount rates. These expected future cash flows were bifurcated between base cash flows and enhanced return cash flows (i.e., the contingent interest) and then the enhanced cash flows were further discounted to arrive at the fair value for the contingent interest feature derivative liability. In instances where reliable market information was not available, management used historical market data proxies and assumptions to determine a reasonable fair value.

The derivative liability was extinguished along with its related debt on October 18, 2023, as discussed in Note 7. The following table provides quantitative information about the significant unobservable inputs used in the fair value measurement of the Level 3 derivative liability as of March 31, 2023 (dollars in thousands):


	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Targets






March 31, 2023	$	3,513	Discounted cash flow	Alternative asset beta to equity markets	0.42 - 1.67
				Alternative asset market discount rate	0.10
				Distribution rate	0.03 - 0.06
				Equity market risk premiums	0.07
				Net asset value volatilities	0.09 - 0.84
				Enhanced return discount rate	0.12


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Beginning balance	$	1,932	$	4,305	$	3,513	$	8,108
Gains recognized in earnings(1)	—		(1,275)		(1,581)		(5,078)
Gain recognized in loss on extinguishment of debt, net	(1,932)		—		(1,932)		—
Ending balance	$	—	$	3,030	$	—	$	3,030

There have been no transfers between levels for any assets or liabilities recorded at fair value on a recurring basis or any changes in the valuation techniques used for measuring the fair value as of December 31, 2023 and March 31, 2023, respectively.

Certain of the Customer ExAlt Trusts hold investments in equity securities that do not have a readily determinable fair value. These equity securities are measured at cost, less impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or a similar investment of the same issuer. The Company classifies these assets as Level 2 within the fair value hierarchy.

The value of these equity securities was $64.5 million and $21.6 million as of December 31, 2023 and March 31, 2023, respectively. Additionally, as of December 31, 2023, one security has cumulative upward adjustments of $10.8 million based upon observable price changes, including a recent equity offering and stock to stock transactions. During the three and nine months ended December 31, 2022, the security received an upward adjustment of nil and $3.3 million, respectively. No such adjustments were made during the three and nine months ended December 31, 2023.

During the first, second and third fiscal quarters of 2024, primarily as a result of a significant, sustained decline in our Class A common stock price and the Company’s related market capitalization, we concluded that it was more likely than not that the fair value of our reporting units was below their carrying amount and resulted in us performing an interim impairment assessment. As a result, we wrote the carrying value of the Ben Liquidity and Ben Custody reporting units down to their estimated fair value and recognized a non-cash goodwill impairment charge of $1.1 billion, $306.7 million and $883.2 million during the three months ended June 30, 2023, September 30, 2023 and December 31, 2023, respectively, which is reflected in loss on impairment of goodwill in the consolidated statements of comprehensive income (loss). Prior to the goodwill impairment recorded during the first quarter of 2024, the Company had not previously recorded any impairments of goodwill. As such, the cumulative impairment loss as of December 31, 2023, is $2.3 billion.

The Company computed the fair value of each reporting unit by computing the overall enterprise value of the Company by valuing its various equity instruments, primarily based on the Class A common stock price per share. The overall enterprise value was allocated to each reporting units using the discounted cash flow method to estimate the relative value of each reporting unit based on their future cash flows using a multi-year forecast, and a terminal value calculated using a long-term growth rate that was informed based on our industry, analyst reports of a public company peer set, current and expected future economic conditions and management expectations. The discount rate used to discount these future cash flows was determined using a capital asset pricing model based on the market value of equity of a public company peer set, adjusted for risk characteristics and expectations specific to the reporting unit, combined with an assessment of the cost of debt.

The discount rates used for each reporting unit in the June 30, 2023 impairment analysis ranged from 24.8% to 25.6%, and the Company applied a terminal year long-term growth rate of 3.0% for each reporting unit. Subsequent to the impairment, there was no excess of reporting unit fair value over carrying value for Ben Liquidity or Ben Custody.

The discount rates used for each reporting unit in the September 30, 2023 impairment analysis ranged from 25.3% to 26.2%, and the Company applied a terminal year long-term growth rate of 3.0% for each reporting unit. Subsequent to the impairment, there was no excess of reporting unit fair value over carrying value for Ben Liquidity or Ben Custody as of September 30, 2023.

The discount rates used for each reporting unit in the December 31, 2023 impairment analysis ranged from 26.3% to 27.2%, and the Company applied a terminal year long-term growth rate of 3.0% for each reporting unit. Subsequent to the

impairment, there was no excess of reporting unit fair value over carrying value for Ben Liquidity or Ben Custody as of December 31, 2023. One reporting unit (Ben Markets) had a negative carrying amount of net assets as of June 30, 2023, September 30, 2023 and December 31, 2023, and goodwill of approximately $9.9 million.


	March 31, 2023		Impairment		December 31, 2023
Ben Liquidity	$	1,725,880	$	(1,725,880)	$	—
Ben Custody	594,219		(554,607)		39,612
Ben Insurance	37,942		(5,725)		32,217
Ben Markets	9,885		—		9,885
Total Goodwill	$	2,367,926	$	(2,286,212)	$	81,714

The estimated fair value of financial instruments, whether or not recognized in the consolidated statements of financial condition, for which it is practicable to estimate those values, are disclosed below. These fair value estimates are determined based on relevant market information and information about the financial instruments. Fair value estimates are intended to represent the price at which an asset could be sold or the price at which a liability could be transferred. However, our estimates of many of these fair values are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated values. Nonfinancial instruments are excluded from disclosure requirements.


	As of December 31, 2023
(Dollars in thousands)	Level in Fair Value Hierarchy	Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	1	$	11,248	$	11,248
Restricted cash	1	20		20
Financial liabilities:

Debt due to related parties, net	2	128,197		132,313
Accounts payable and accrued expenses	1	96,194		96,194


	As of March 31, 2023
(Dollars in thousands)	Level in Fair Value Hierarchy	Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	1	$	8,726	$	8,726
Restricted cash	1	819		819
Financial liabilities:
Customer ExAlt Trusts loan payable, net	2	52,129		56,635
Debt due to related parties, net	2	99,314		96,465
Accounts payable and accrued expenses	1	65,724		65,724