EQUITY SECURITIES

6 Months Ended

Jun. 30, 2020

Investments and Equity Securities [Abstract]

Investment, Policy [Policy Text Block]

6. EQUITY SECURITIES

Equity securities under ASC 321

Certain of our equity securities lack readily determinable fair values and therefore the securities are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar equity securities of the same issuer. The carrying amount of our equity securities without readily determinable fair values was approximately $3.9 million and $3.9 million at June 30, 2020 and December 31, 2019, respectively. Cumulative downward adjustments for price changes and impairments for our equity securities without readily determinable fair values were $6.2 million, and the cumulative upward adjustments for price changes to equity investments were $958,000 as of June 30, 2020. The impairments and downward adjustments for the period related to equity securities without readily determinable fair values at June 30, 2020 and 2019 is as follows (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Impairments and downward adjustments of equity securities without readily determinable fair values	$	—	$	—	$	—	$	(2,958	)

Certain of these equity securities and our marketable securities, which had a carrying value of $2.6 million at June 30, 2020 and $11.1 million at December 31, 2019, are carried at fair value based on Level 1 inputs. See Note 3—Fair Value Measurement. The portion of unrealized gains and losses for the period related to equity securities with readily determinable fair value still held at June 30, 2020 and 2019 is calculated as follows (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Net losses recognized during the period on equity securities and marketable securities	$	(836	)	$	(500	)	$	(2,455	)	$	(1,118	)
Less: Net gains recognized during the period on equity securities and marketable securities sold	228			—			2,161			—
Unrealized losses during the reporting period on equity securities and marketable securities still held	$	(1,064	)	$	(500	)	$	(4,616	)	$	(1,118	)

Equity method securities under ASC 323

Our equity method securities include equity securities in which we can exercise significant influence, but not control, over these entities through either holding more than a 20% voting interest in the entity or through our representation on the entity's board of directors. The following table includes our equity method securities and ownership interest as of June 30, 2020:

	Ownership interest
Bitt Inc.	21%
Boston Security Token Exchange LLC	50%
Chainstone Labs, Inc.	29%
FinClusive Capital, Inc.	11%
GrainChain, Inc.	18%
Medici Land Governance, Inc.	35%
Minds, Inc.	24%
PeerNova, Inc.	11%
SettleMint NV	29%
Spera, Inc.	19%
VinX Network Ltd.	29%
Voatz, Inc.	20%

The carrying amount of our equity method securities was approximately $46.1 million and $37.3 million at June 30, 2020 and December 31, 2019, respectively.

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

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Net loss recognized on our proportionate share of the net losses of our equity method securities and amortization of the basis difference	$	3,545	$	2,033	$	6,013	$	3,058
Impairments on equity method securities	—		1,256		—		1,256
Net loss recognized during the period on equity method securities sold	—		—		—		524

At June 30, 2020, we had a $5 million contractual off-balance sheet contingent obligation to provide additional funding in the future to Boston Security Token Exchange LLC ("BSTX") if and when, during the first 48 months after the establishment of the entity, the aggregate cash balance of BSTX's combined bank accounts fall below $2 million for any reason. Subsequent to June 30, 2020, the conditions to fund the obligation were triggered but we have not yet provided the additional funding as of our filing date.

For the three and six months ended June 30, 2020, we recognized $2.5 million and $4.1 million, respectively, of revenue in Other Revenue on our consolidated statements of operations for developer and other secondment services provided to certain of these entities that are accounted for under the equity method. For the three and six months ended June 30, 2019, we recognized $683,000 and $1.3 million, respectively, of revenue in Other Revenue on our consolidated statements of operations for developer and other secondment services provided to certain of these entities that are accounted for under the equity method.

We are party to notes receivable agreements with certain of these equity method entities. The carrying amount of these notes receivables, including accrued interest, was $5.2 million and $4.6 million at June 30, 2020 and December 31, 2019, respectively, which are included in Other long-term assets, net in the consolidated balance sheets.