Gemini Space Station, Inc.GEMI
Gemini Space Station, Inc. Fair Value Disclosure
Fair Value Measurements
Level 3 Investments - Term Loans
The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities measured and recorded at fair value on a recurring basis (in thousands):
| December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | 21,242 | $ | — | $ | — | $ | 21,242 | |||||||||||||||
| Restricted cash equivalents: | |||||||||||||||||||||||
| Money market funds | 1,674 | — | — | 1,674 | |||||||||||||||||||
| Crypto assets held: | |||||||||||||||||||||||
| Bitcoin | 420,635 | — | — | 420,635 | |||||||||||||||||||
| Ether | 8,072 | — | — | 8,072 | |||||||||||||||||||
| Other crypto assets | 10,915 | — | — | 10,915 | |||||||||||||||||||
| Accounts receivable, net: | |||||||||||||||||||||||
Derivative assets(1) | — | (371) | — | (371) | |||||||||||||||||||
| Prepaid expenses and other current assets: | |||||||||||||||||||||||
| Equity securities | 357 | — | — | 357 | |||||||||||||||||||
| Crypto asset options | — | 69 | — | 69 | |||||||||||||||||||
| Other non-current assets: | |||||||||||||||||||||||
| Warrants | — | — | 851 | 851 | |||||||||||||||||||
| Total assets | $ | 462,895 | $ | (302) | $ | 851 | $ | 463,444 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Related party loans: | |||||||||||||||||||||||
Derivative liabilities (1) | $ | — | $ | 188,576 | $ | — | $ | 188,576 | |||||||||||||||
| Other current liabilities: | |||||||||||||||||||||||
| Crypto asset collateral payable | — | 904 | — | 904 | |||||||||||||||||||
| Crypto asset options | — | 69 | — | 69 | |||||||||||||||||||
| Crypto asset futures | — | 13 | — | 13 | |||||||||||||||||||
| Total liabilities | $ | — | $ | 189,562 | $ | — | $ | 189,562 | |||||||||||||||
| __________________ | |||||||||||||||||||||||
(1) Excludes the related host contracts which are not measured and recorded at fair value as of December 31, 2025 and are disclosed in the table below. | |||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Restricted cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | 1,607 | $ | — | $ | — | $ | 1,607 | |||||||||||||||
| Crypto assets held: | |||||||||||||||||||||||
| Bitcoin | 412,115 | — | — | 412,115 | |||||||||||||||||||
| Ether | 17,562 | — | — | 17,562 | |||||||||||||||||||
| Other crypto assets | — | 40,424 | — | 40,424 | |||||||||||||||||||
| Receivable, crypto assets pledged: | |||||||||||||||||||||||
| Bitcoin | — | 86,708 | — | 86,708 | |||||||||||||||||||
| Ether | — | 81,592 | — | 81,592 | |||||||||||||||||||
| Accounts receivable, net: | |||||||||||||||||||||||
Derivative assets(1) | — | 307 | — | 307 | |||||||||||||||||||
| Prepaid expenses and other current assets: | |||||||||||||||||||||||
| Crypto asset collateral held | — | 15,275 | — | 15,275 | |||||||||||||||||||
| Equity securities | 219 | — | — | 219 | |||||||||||||||||||
| Corporate bonds | — | 774 | — | 774 | |||||||||||||||||||
| Crypto asset options | — | 6,354 | — | 6,354 | |||||||||||||||||||
| Total assets | $ | 431,503 | $ | 231,434 | $ | — | $ | 662,937 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Related party loans: | |||||||||||||||||||||||
Derivative liabilities (1) | $ | — | $ | 413,700 | $ | — | $ | 413,700 | |||||||||||||||
| Related party convertible notes: | |||||||||||||||||||||||
| Convertible notes | — | — | 248,783 | 248,783 | |||||||||||||||||||
| Other current liabilities: | |||||||||||||||||||||||
| Crypto asset collateral payable | — | 15,275 | — | 15,275 | |||||||||||||||||||
| Crypto asset options | — | 6,371 | — | 6,371 | |||||||||||||||||||
| Crypto asset futures | — | 1,249 | — | 1,249 | |||||||||||||||||||
| Total liabilities | $ | — | $ | 436,595 | $ | 248,783 | $ | 685,378 | |||||||||||||||
| __________________ | |||||||||||||||||||||||
(1) Excludes the related host contracts which are not measured and recorded at fair value as of December 31, 2024 and are disclosed in the table below. | |||||||||||||||||||||||
Refer to Note 2. Summary of Significant Accounting Policies for further details on the valuation methods and significant inputs of the Level 2 and Level 3 assets and liabilities identified above.
During the year ended December 31, 2025, the Company made a transfer into level 3 of the fair value hierarchy. The Company's term loans were previously classified as Level 2 investments. However, during the year ended December 31, 2025, the 2024 Term Loan was amended to include a conversion option until January 23, 2025, which introduced significant unobservable inputs into the valuation. As a result, the 2024 Term Loan was classified as a Level 3 investment.
During the years ended December 31, 2024 and 2023, the Company did not make any transfers in or out of level 3 of the fair value hierarchy.
The following table is a roll-forward of Level 3 investments measured and recorded at fair value on a recurring basis (in thousands):
Level 3 Investments - Warrants
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance | $ | — | $ | — | $ | — | |||||||||||
| Additions | 4,345 | — | — | ||||||||||||||
| Unrealized loss attributable to change in fair value | (3,494) | — | — | ||||||||||||||
| Ending balance | $ | 851 | $ | — | $ | — | |||||||||||
Level 3 Investments - Convertible Notes
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Beginning balance related party convertible notes | $ | 248,783 | $ | 134,928 | $ | — | |||||||||||
| Additions | 11,310 | 85,098 | 131,454 | ||||||||||||||
| OCI - Change in fair value attributable to instrument-specific credit risk | (875) | (1,906) | (664) | ||||||||||||||
| Unrealized loss attributable to change in fair value | 25,789 | 30,663 | 4,138 | ||||||||||||||
| Conversion of convertible notes to common stock in connection with IPO | (285,007) | — | — | ||||||||||||||
| Ending balance related party convertible notes | $ | — | $ | 248,783 | $ | 134,928 | |||||||||||
Level 3 Investments - Term Loans
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024(1) | 2023(1) | |||||||||||||||
| Beginning balance related party term loans | $ | 237,209 | $ | — | $ | — | |||||||||||
| Additions | 230,438 | — | — | ||||||||||||||
| OCI - Change in fair value attributable to instrument-specific credit risk | (2,396) | — | — | ||||||||||||||
| Unrealized loss attributable to change in fair value | 119,309 | — | — | ||||||||||||||
| Conversion of related party term loans to common stock in connection with IPO | (584,560) | — | — | ||||||||||||||
| Ending balance related party term loans | $ | — | $ | — | $ | — | |||||||||||
| __________________ | |||||||||||||||||
| (1) The 2024 Term Loan was not yet amended to include a conversion option until January 23, 2025 and was classified as a Level 2 investment. | |||||||||||||||||
Prior to the IPO, the Company fair valued its convertible notes and convertible term loans utilizing a scenario-based approach that considered various conversion and repayment scenarios, along with a discounted cash flow analysis, which was used to determine the value of an investment today based on projections of future cash flows. The significant input utilized in the discounted cash flow analysis included the discount rate which ranged from 19.5% - 21.7% for the years ended December 31, 2025, 2024 and 2023.
Convertible notes and related party term loans outstanding prior to the IPO converted to equity and are no longer included in Level 3 investments as of December 31, 2025.
Assets and liabilities measured and recorded at fair value on a non-recurring basis
The Company’s non-financial assets and liabilities, such as intangible assets, software, property and equipment, and lease right-of-use assets, are adjusted to fair value on a non-recurring basis when an impairment
charge is recognized. The fair value used in assessing an impairment for these assets are largely based on Level 2 or Level 3 inputs.
The Company’s strategic investments are also measured at fair value on a non-recurring basis. Such fair value measurements are based predominantly on Level 3 inputs such as the recent transaction price involving the same or similar investment, and are adjusted as necessary to reflect relevant market conditions and investment-specific factors. Refer to Note 8. Prepaid Expenses and Other Assets for additional information.
Financial assets and liabilities not measured and recorded at fair value
The following tables summarize the estimated fair values of our financial assets and financial liabilities that are measured at amortized cost, and are not required to be carried at fair value on a recurring basis, as of December 31, 2025 and 2024 (in thousands):
| December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total(1) | ||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||
| Financial assets for which carrying values equal or approximate fair value | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 252,215 | $ | — | $ | — | $ | 252,215 | |||||||||||||||
| Restricted cash and cash equivalents | 113,605 | — | — | 113,605 | |||||||||||||||||||
| Customer custodial funds | 527,354 | — | — | 527,354 | |||||||||||||||||||
Accounts receivable, net(2) | 7,280 | — | 23,978 | 31,258 | |||||||||||||||||||
| Total assets | $ | 900,454 | $ | — | $ | 23,978 | $ | 924,432 | |||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||
| Financial liabilities for which carrying values equal or approximate fair value | |||||||||||||||||||||||
| Custodial funds due to customer | $ | 527,307 | $ | — | $ | — | $ | 527,307 | |||||||||||||||
| Third party loans | — | 75,151 | — | 75,151 | |||||||||||||||||||
Related party loans(2) | — | 215,355 | — | 215,355 | |||||||||||||||||||
| Funding debt | — | 154,374 | — | 154,374 | |||||||||||||||||||
| Total liabilities | $ | 527,307 | $ | 444,880 | $ | — | $ | 972,187 | |||||||||||||||
| __________________ | |||||||||||||||||||||||
| (1) The total carrying value is equal to the total estimated fair value for all financial assets and liabilities. | |||||||||||||||||||||||
(2) Excludes the embedded derivatives which are measured and recorded at fair value as of December 31, 2025 and are disclosed in the table above. | |||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total(1) | ||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||
| Financial assets for which carrying values equal or approximate fair value | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 42,847 | $ | — | $ | — | $ | 42,847 | |||||||||||||||
| Restricted cash and cash equivalents | 26,776 | — | — | 26,776 | |||||||||||||||||||
| Customer custodial funds | 575,628 | — | — | 575,628 | |||||||||||||||||||
Accounts receivable, net(2) | 5,802 | — | 59,258 | 65,061 | |||||||||||||||||||
| Total Assets | $ | 651,053 | $ | — | $ | 59,258 | $ | 710,312 | |||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||
| Financial liabilities for which carrying values equal or approximate fair value | |||||||||||||||||||||||
| Custodial funds due to customer | $ | 574,080 | $ | — | $ | — | $ | 574,080 | |||||||||||||||
| Third party loans | — | 117,612 | — | 117,612 | |||||||||||||||||||
Related party loans(2) | — | 385,671 | — | 385,671 | |||||||||||||||||||
| Total liabilities | $ | 574,080 | $ | 503,283 | $ | — | $ | 1,077,363 | |||||||||||||||
| __________________ | |||||||||||||||||||||||
| (1) The total carrying value is equal to the total estimated fair value for all financial assets and liabilities. | |||||||||||||||||||||||
(2) Excludes the embedded derivatives which are measured and recorded at fair value as of December 31, 2024 and are disclosed in the table above. | |||||||||||||||||||||||
The carrying values of financial assets and liabilities equal or approximate fair value because they are short-term in duration, have no defined maturity or have a floating interest rate.
The Company determined credit card receivables to be Level 3 assets. While credit card receivables are short term in duration, the Company estimates their fair value using the current expected loss model, which incorporates unobservable inputs. Accordingly, Level 3 classification is appropriate.
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About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.