INVESTMENTS AND FAIR VALUE MEASUREMENT

12 Months Ended

Dec. 31, 2022

NOTE 8: INVESTMENTS AND FAIR VALUE MEASUREMENT

Investments

Investments are included in other current assets on the consolidated balance sheet and consisted of the following:


	December 31, 2021
(in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Debt securities:
Asset-backed securities	$	5	$	—	$	—	$	5
Commercial paper	14		—		—		14
Corporate bonds	7		—		—		7
Government bonds	1		—		—		1
Total investments	$	27	$	—	$	—	$	27


	December 31, 2022
(in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Debt securities:

Commercial paper	5		—		—		5
Corporate bonds	2		—		—		2
Government bonds	3		—		—		3
Total investments	$	10	$	—	$	—	$	10

All of our debt securities as of December 31, 2022 had a stated contractual maturity or redemption date within one year.

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis as of the date indicated below were presented on our consolidated balance sheets as follows:


	December 31, 2021
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	4,004	$	—	$	—	$	4,004


Other current assets:
Asset-backed securities	—		5		—		5
Commercial paper	—		14		—		14
Corporate bonds	—		7		—		7
Government bonds	1		—		—		1

Equity securities - securities owned	14		—		—		14
User-held fractional shares	1,834		—		—		1,834

Total financial assets	$	5,853	$	26	$	—	$	5,879

Liabilities



Fractional share repurchase obligations	$	1,834	$	—	$	—	$	1,834
Total financial liabilities	$	1,834	$	—	$	—	$	1,834


	December 31, 2022
(in millions)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	735	$	—	$	—	$	735


Other current assets:

Commercial paper	—		5		—		5
Corporate bonds	—		2		—		2
Government bonds	3		—		—		3
Equity securities - securities owned	8		—		—		8
Asset related to user cryptocurrencies safeguarding obligation	—		8,431		—		8,431
User-held fractional shares	997		—		—		997

Total financial assets	$	1,743	$	8,438	$	—	$	10,181

Liabilities


User cryptocurrencies safeguarding obligation	$	—	$	8,431	$	—	8,431
Fractional share repurchase obligations	997		—		—		997
Total financial liabilities	$	997	$	8,431	$	—	$	9,428

During the year ended December 31, 2022, we did not have any transfers in or out of Level 3 assets or liabilities.

Safeguarded user cryptocurrencies

Safeguarded user cryptocurrencies were as follows:


(in millions)	December 31, 2022
Dogecoin (DOGE)	$	2,802
Ethereum (ETH)	2,341
Bitcoin (BTC)	2,327
Other	961
Total user cryptocurrencies safeguarding obligation and corresponding asset	$	8,431

The fair value of the user cryptocurrencies safeguarding obligation and the corresponding asset were determined based on observed market pricing representing the last price executed for trades of each cryptocurrency as of December 31, 2022.

Convertible Notes and Warrant Liability

In February 2021, we issued two tranches of convertible notes (the “convertible notes”) and granted to each purchaser of the Tranche I convertible notes a warrant to purchase equity securities (the “warrant liability”). We elected the fair value option for both tranches of the convertible notes as we believe it best reflects their underlying economics. Under the fair value option, the convertible notes were initially measured at their issuance date estimated fair value and subsequently remeasured at their estimated fair value at the end of each reporting period. Upon the closing of the IPO, all of our outstanding convertible notes and warrants were reclassified from liability to equity and the fair value was no longer required to be remeasured.

The following table sets forth a summary of the changes in the estimated fair value of our convertible notes and warrant liability:


	Year Ended December 31, 2021
(in millions)	Convertible notes(2)		Warrant liability
Beginning balance	$	—	$	—
Issued during the period	3,299		253
Change in fair value(1)	1,919		127
Reclassifications to equity	(5,218)		(380)
Ending balance	$	—	$	—

________________

(1)We have elected to present the component related to accrued interest in the change in fair value of convertible notes and warrant liability.

(2)None of the expense recorded due to changes in fair value for the convertible notes was attributable to the change in the instrument-specific credit risk.