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First Move with Julia Chatterley
Musk: $44 Twitter Takeover Deal "Temporarily' on Hold; Russian Helicopter Destroyed by Ukrainian Missile; Levitt: Inflation's Peak may be here, at Elevated Levels; Stablecoin Takes Center Stage after Terra Luna Shock; Drone Company Working to Deliver Medical Supplies; CNN's David Culver Leaves China for the First Time Since 2019. Aired 09-10a ET
Aired May 13, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
ALISON KOSIK, CNN HOST, FRIST MOVE: I'm Alison Kosik in New York. We begin this hour with a series of stunning developments in Elon Musk's ongoing
takeover bid for Twitter.
The billionaire CEO announcing just hours ago that the $44 billion deal to take Twitter private is now on hold and then tweeting hours later that he's
not ready to walk away just yet.
Twitter shareholders reacting negatively to the news shares initially fell more than 20 percent.
They have since bounced back a bit. They're currently down about 13 percent. So of course many questions as the story develop, including what
is Musk's endgame here? And is he angling for a better price during this volatile time for tech?
I want to bring in Rahel Solomon she is going to talk more about this for us, great to see Rahel. So, you know, we know that Elon Musk has been
negotiating this Twitter deal on Twitter since the beginning. But it really makes you wonder if the SEC should be stepping in at this point because
it's really investors being tossed about here.
RAHEL SOLOMON, CNN CORRESPONDENT: So many questions Alison good to be with you, yes in the words of one analyst. This is a circus show that is turning
into a Friday the 13th Horror Show. Let's start about 6 am this morning.
This is when the story sort of all began. That's when Elon Musk tweeted as you pointed out, that yes, the Twitter deal was temporarily on hold pending
detail supporting calculation that spam. Fake accounts do indeed represent less than 5 percent of users will that tweet sent pre-market shares of
Twitter plunging.
Short time later at about 8 am just before eight he tweeted perhaps a clarification that he was still committed to the acquisition. Look, we do
know that Elon Musk has said from the beginning when he announced his interest in Twitter that he wanted to fix Twitter and also read the company
of spam bot.
So if you are to believe Musk at his word, perhaps the news at Reuter's article suggesting that it's not as big of an issue as he initially
expected. When I asked Dan Ives an Analyst who covers Twitter very closely about that, he said, that's like saying the dog ate your homework.
He wasn't buying it. But look at any event, investors in the markets now trying to game out and figure out was this a ploy to perhaps renegotiate at
a lower price? We know his offer was 54.20? Or is this really an excuse for him to walk away, so many questions?
KOSIK: Yes, so he tweeted, he's committed to this deal. But investors at least a bunch of investors are still committed to selling this stock. I
mean, investors really getting hit with this, not just with Twitter, but we are seeing actually shares of Tesla in the green?
SOLOMON: Move on this exactly, so yes, so as you pointed out, shares of Twitter plunged on this news. They then bounced back a little bit after we
got that clarification, or the second tweet. Look, when he announced his interest to buy Twitter.
I want to show you a year-to-date chart of Twitter and you can sort of see the price action. But when Elon Musk announced his bid to buy Twitter, you
saw shares pop that was in April there. And then when Twitter's board accepted the offer, it popped to 51.70. And as you can see, as of
yesterday, was closing at 45.09 so nowhere near the 54.20, which was his offer.
And he did say in his SEC filing that he knew he was buying it at a premium. But to your point Tech has been getting quite a beating as of late
and Twitter shares are now closer to $45. So does 54.20 still seem like a great deal, a great price or valuation for Elon Musk, unclear?
What we can see, however, is that Tesla owners, Tesla shareholders seem to like this news. Those shares are up about 7 percent pre market. And from
the beginning, Alison, as you know, Tesla investors were never really thrilled about this deal to begin with, for one reason, because Elon Musk
would likely have to leverage some of his shares in order to pull off this deal.
But also because did running Twitter distract Elon Musk from running Tesla, of course, he is the visionary founder of the company. And so Tesla owners
we never really crazy about this deal to begin with. And so perhaps Twitter's loss is Tesla shareholders gain.
KOSIK: Something tells me we'll all be watching Twitter at least Elon Musk's account today. Rahel Solomon thanks so much. Let's bring in Chief
Media Correspondent Brian Stelter to kind of dissect this tweet, Brian, you know, what's your take on this calculation in the first tweet, you know him
saying that fake accounts and bots make up less than 5 percent of users?
BRAIN STELTER, CNN CHIEF MEDIA CORRESPONDENT: Yes, first of all, bots and spam fake accounts are a plague on Twitter. They have been for years and to
suggest that they're just a small portion of the total user base? Give me a break.
[09:05:00]
STELTER: Elon Musk must know better than that. He's on the site, he sees the problem. He sees the pollution when he uses the site. So this has all
the trappings of negotiations of Musk trying to get a lower price trying to re-price this deal, and he very well may be able to do that.
But whether the banks are on board, his finances are on board is an open question. And then I think the other question is how much does he really
want this? I think he is determined to, to lead Twitter to have his vision for Twitter be the future Twitter.
But it's more fun for him to have this deal be in the works and to spout off on Twitter and get everyone's attention. It's almost like its more fun
to be doing the deal than it is actually own Twitter. You know what I mean?
So I think we have to look to that breakup fee a $1 billion breakup fee. That is what he would owe if he walks away. So he may be trying to get the
price down without paying that $1 billion breakup fee.
But I think that do we have to it now is he actually going to go through this? Or is it going to pay that $1 billion, let the stock decline and come
back around with a new bid for Twitter?
KOSIK: Brian, what do you think are the political ramifications here? If Musk walks away, particularly for Republicans, you know who wanted to
reinstate Donald Trump's account?
STELTER: Well, that's the thing, right? It's more fun for him to talk a big game on Twitter and say, I'm going to bring Donald Trump back. And I think
he's not the best candidate, but he shouldn't have been banned.
It's almost more fun for Musk to pretend to be CEO than it is to actually own it, and then have to actually own the decisions you make and own the
responsibility and the consequences. But what does it mean for Republican politicians; there has been a surge of follower growth of new accounts
coming into Twitter, among conservatives in the U.S. because they believe Musk is going to take over Twitter.
So already there's been a change in the Twitter user base with conservatives more interested in the platform. Donald Trump, of course, has
not come back. He is still banned for now whether he comes back and in what way?
It would be a question, I think down the line in the months to come. But this would have consequences politically, because we've already seen
Twitter become more popular among conservatives, maybe a little less so among Democrats or liberals in the U.S.
And of course, this spans the entire world where the policies Musk would put in place much more permissive content moderation that would affect many
different political environments around the world.
So now, I guess we just look at his Twitter account and see, I'd love to know what regulators of the SEC think about all this though. They must feel
so un-equipped to deal with the likes of Musk right now.
KOSIK: Yes. I really think regulators really need to step in and they have to be a lot faster about it right? You know, we shall see what happens
today? Brian Stelter thanks so much thanks.
STELTER: Thanks.
KOSIK: In Jerusalem Israeli police have used batons to beat mourners during the funeral of the slain Al Jazeera Journalist Shireen Abu Akleh
authorities were seen hitting several people carrying her coffin.
The crowd was temporarily pushed back before it was allowed to proceed to a church. Atika Schubert is at Mount Zion Cemetery, Atika. I know there was
an expectation here that an escalation in tensions could happen at her funeral. What are you learning?
ATIKA SHUBERT, JOURNALIST: Well, we were there at the hospital when it happened and essentially the family but mostly mourners. Hundreds of
mourners, who showed up there wanted to have a funeral procession walking the coffin out but the Israeli police said no.
That would not be allowed, fearing that it would escalate. When then the pallbearers tried to take the coffin out Israeli riot police then charged
them moving into the hospital grounds and at one point, targeting those pallbearers nearly knocking the coffin to the ground.
It was a dramatic scene, it was very tense. There were tear gas and flash grenades thrown. It was certainly frightening for many of the mourners that
were there. However, the family then took charge and said that they would simply drive the coffin to the church not have a walking funeral
procession.
An agreement was reached with Israeli police, who were then able to withdraw some of the riot police there. Then they moved to the church. And
what we saw really, in the procession here was quite stunning, thousands of Palestinians coming out to show an outpouring a grief for Shireen Abu
Akleh. And now we're here at the cemetery, where her coffin is now being placed next to her parents at Mount Zion Cemetery Alison.
KOSIK: Alright, Atika Schubert thanks for all of your reporting. And now to the latest from Ukraine where Russian troops are pulling back from the
countries second largest city, Kharkiv in the Northeast. These are pictures of three bridges destroyed around Kharkiv.
It is believed Russians blew them up to stop advancing Ukrainian troops. Ukraine has been making steady gains there. On Snake Island, which has
become symbolic of Ukrainian defiance new video has emerged of a Russian helicopter being destroyed by a Ukrainian missile strike.
[09:10:00]
KOSIK: Ukraine says it has destroyed multiple Russian assets on the island in recent weeks, and that a Russian support ship is on fire and being towed
away from the island. CNN has not been able to verify that claim.
Russia is threatening Finland with retaliation after Finnish leaders gave their backing to NATO membership. Former President Dmitry Medvedev warning
that Russia would seriously strengthen ground, naval and air defenses on its western flank.
Russia may be icing out Finland but lines of communications remain open with Germany. President Vladimir Putin speaking with German Chancellor Olaf
Scholz today, according to the Kremlin, they discuss the situation in Ukraine and the evacuation of the Azovstal Plant in Mariupol.
Meantime in the Ukrainian Capital of Kyiv, the first war crime trial is being held since the Russian invasion, a 21 year old Russian soldier is
accused of killing an unarmed civilian in February. Melissa Bell is in Kyiv for us, Melissa, so what are you expected to hear in court today?
MELISSA BELL, CNN CORRESPONDENT: Well, this was just a preliminary hearing, the rest will come on Wednesday, Vadim Shysimarin a 21 year old Russian
soldier was asked to state his name and his age, and so on in order to establish his identity.
It is the very beginning of the trial. But an extraordinary trial, Alison, because what we're talking about is a trial for war crimes in a civilian
court that is being held, even as the war continues to rage on, as you were just saying, in the south, and in the east of Ukraine.
Now, of course, international justice is also doing its thing. There have been dozens of team's forensic teams on the ground here, the International
Criminal Court, but also the UN Human Rights Council.
A dozen or so international teams have also been here, there will be investigations and national jurisdictions holding their own trials we're
hearing from the country's Prosecutor General. But this was a Ukrainian trial of that incident that took place in the very north of the country on
the 28th of February four days after the war began when that unarmed civilian was killed on his bicycle, even as he was on his phone, not very
far from his house.
So just the beginning of what it seems will be a historic trial. Now, the woman who's in charge the country Ukraine's general prosecutor, we managed
to speak to her today to ask her about it.
And she explained why it was so important that even as the war went on, even as the Ukrainian economy is on its knees, justice be done, and the
judiciary stays upright in order that this trial can take place in his extraordinary circumstances.
Because she said, it is about ensuring for the first time given the technology that's here in Ukraine, given the documenting of these war
crimes these alleged war crimes even as they've happened, thanks to technology, the presence of journalists.
The fact that the whole world is watching, she wanted to use that in order to change the sense of impunity that soldiers have traditionally had during
wartime have a listen.
(BEGIN VIDEO CLIP)
IRYNA VENEDIKTOVA, UKRAINIAN PROSECUTOR GENERAL: These proceedings now can save lives of our Ukrainian civilians on the south and eastern part of
Ukraine. Because these perpetrators who are now fighting will see that we will find all of them, we will identify all of them, and we will start to
prosecute all of them.
(END VIDEO CLIP)
BELL: Now, we spoke after that preliminary hearing to the defense lawyer, the man who will represent Vadim Shysimarin and we asked him whether he
believed his client, his 20 year old, one year old Russian soldier would get a fair trial.
He said that he had faith in the Ukrainian judiciary the prosecutor told us earlier that this trial was based on the facts that had been collected by
all these international specialized teams that the trial would be entirely transparent and held according to the standards of Ukrainian justice.
That both told us they believed was entirely independent. But Alison, the question that poses itself in this extraordinary trial, again, the first
time that I can think of that this has been tried is the question of the emotion around it.
That is going to be one of the challenges, both for the independence of the judiciary, the prosecutors and the defense, because even as the war rages
on, emotions, as you'll understand that it is normal or extremely raw.
And we had an interesting moment when we caught up with the courts, translator who does the translating for Vadim Shysimarin. And we asked her,
whether she felt about being involved. She said, look, I don't feel hatred for him, because the tears of Russian mothers are just as salty as our own,
Alison.
KOSIK: Oh, those are emotional words. Melissa Bell, thank you so much. And these are the stories making headlines around the world. The President of
the United Arab Emirates Sheikh Khalifa Bin Zayed Al Nahyan on has died at the age of 73. Becky Anderson looks at his legacy.
[09:15:00]
(BEGIN VIDEOTAPE)
BECKY ANDERSON, CNN CORRESPONDENT (voice over): Sheikh Khalifa Bin Zayed Al Nahyan was born in 1948 the United Arab Emirates didn't even exist as a
nation. This was a land where many earn their living by fishing, or purling.
But his family was instrumental in transforming this into one of the world's largest oil producers. By the time the UAE a federation of seven
states was created in 1971, Sheikh Khalifa was the Crown Prince of the wealthiest state and country's capital, Abu Dhabi.
He took over the presidency in 2004 after the death of his father, Sheikh Zayed Bin Sultan, the nation's founder. Like his father, he wished to
modernize his country, shaping it into a haven of stability in a volatile neighborhood.
At home, he invested in the country's armed forces and developed its lucrative energy sector. His success spelled out on Dubai's Skyline were
one of the tallest buildings in the world, the Burj Khalifa took on its leaders name, after the government bailed Dubai out of its debt woes in
2009.
Overseas he solidified traditional alliances with countries like the UK, while boosting trade ties with new partners. Under his leadership, the UAE
invested its enormous wealth in globally recognized airlines, prized assets.
Sporting powerhouses and major global events that have collectively put the country on the map, turning it into a global tourist destination by the
early 2010's, deteriorating health increasingly kept Sheikh Khalifa out of the public limelight.
He underwent surgery after suffering a stroke in 2014. But his modernizing vision for the country has carried on under the leadership of his half-
brother in Abu Dhabi Crown Prince Mohammed Bin Zayed.
It's taken bold diplomatic steps, such as establishing relations with Israel through the Abraham Accords, and hosting the first ever people visit
to the Arabian Peninsula, positioning itself as tolerant Middle Eastern society.
All the while delicately balancing relations with Western and non-western powers alike. It's used its military might to project power, sometimes
controversially in places like Yemen, and it's been diversifying its economy to cut its reliance on oil revenues investing in renewable and
nuclear energy while taking steps such as allowing for complete foreign ownership of companies and introducing a golden visa program to maintain
its position as an attractive destination for foreign investment and talent.
It's even entered the space race, becoming the first ever Arab country to send a mission to Mars, aptly named Hope. It is by all accounts a country
transformed and that is how Sheikh Khalifa Bin Zayed Al Nahyan leaves it to his successor.
(END VIDEOTAPE)
KOSIK: North Korea says an outbreak of explosive COVID outbreak is underway with six people believed to have died and hundreds of thousands of
infections that are according to state media. Pyongyang calls the situation a major national emergency. It comes one day after the secretive regime
reported its first Coronavirus case.
Straight ahead more on why Elon Musk says his Twitter takeover is now on hold? And stable by name so why the drama we look at the so called stable
coin at the heart of a crypto crash.
(COMMERCIAL BREAK)
[09:20:00]
KOSIK: Welcome back! I'm Alison Kosik. Call it perhaps the pause that refreshes Wall Street U.S. Futures are trading higher. The NASDAQ set to
rise for a second straight session. A bit of a better picture here after a volatile week that saw the S&P 500 dip perilously close to bear market
levels, or a drop of 20 percent. That said many stocks in the S&P 500 already are sitting in bear territory.
We're also closely watching Breaking News of Twitter as we have been reporting all morning shares of the social media giant are falling on news
that Elon Musk is putting his $44 billion takeover deal for the company temporarily on hold more on that later in the show.
But first here with this his take on the broader market action. Let's bring in Brian Levitt. He's the Global Market Strategist at Invesco Brian, thanks
for being here!
BRIAN LEVITT, GLOBAL MARKET STRATEGIST, INVESCO: It's my pleasure. Thank you.
KOSIK: So we are seeing green arrows this morning. But you know, overall, it's been, you know, just stomach churning all week. How bad is it going to
get here? Are we getting close to capitulation here? Is this really a market in the process of putting a bottom on this?
LEVITT: Yes, I mean, we are getting closer. You know, it's going to be difficult to pinpoint the exact moment. But we are getting closer and you
talk about capitulation. And you think about some of the washout in the market, one of the things I look at is the percentage of stocks in the New
York Stock Exchange trading above their 200 day moving average.
Usually when you're around bottoms the average is around 15 percent. We were 50 percent at the end of March 50 we've come down to 22 percent. So
that's a significant move. Almost 80 percent of the market is trading below its 200 day moving average. So that's a significant move. We're getting
closer.
KOSIK: So you're thinking this is an oversold situation.
LEBITT: Well, it's an environment in which interest rates went up significantly. And when it given the inflationary environment and the bond
markets undefeated, anytime you see interest rates move up like that, you see an equity market valuation adjustment.
So you know whether or not it was warranted. It was an environment in which when the discount rate changes, equity valuations adjust, we've gone a
decent way. Are we oversold? I don't know if we're oversold, but we're moving in that direction.
We're getting closer to where you know that the more of the capitulation has happened and a bottom starts to be put in for these markets.
KOSIK: So much of the nervousness stems from inflation that is raging in the economy. Do you think that we are at our less at peak inflation? Or is
this just more at a situation of persistent inflation? You know, we got the latest inflation numbers. They're showing it's slowing a bit. But you know
does one month really create a trend?
LEVITT: Right. And it tends to place in a CPI report for a massive economy. But I think what U.S. doesn't have to be mutually exclusive, we are likely
at peak inflation, but it could still be persistent for some time.
And so what's going to end up happening here is that demand is going to slow driven by the Fed driven by what's happened with equities driven by
mortgage rates, and the economy is going to moderate which will start to bring down inflationary pressures.
Now when I say persistent, it's not going to fall to 2 percent anytime soon, but what the market needs to see remember, markets don't trade on
good or bad. They trade on whether things are better or worse relative to expectations. And so what we need to see in the coming months is that the
inflation picture is getting better relative to expectations.
If you look in the bond market if you look at the breakeven that's what the picture is telling you. The one year of breakeven was over 6 percent so
that's the bond markets expectation for inflation just a couple of weeks ago.
[09:25:00]
LEVITT: I looked yesterday it was around 4.6, 4.7 percent. So that's a pretty significant move for attending a pretty significant slowdown in the
economy. Good news, you know, sometimes bad news for the economy could be good news. And so it is likely to moderate from here.
KOSIK: Was it a mistake? Do you think for Fed Chair Jay Powell to take 75 basis points or three quarters of a percent of a move higher off the table?
And do you think that the Fed could put that back on the table?
LEVITT: Well, I think they should front load these rate hikes. Now far be it for me to tell Jay Powell, what he's currently doing is a mistake. But I
would like to see them front load these moves and determine, you know, how's the economy adjusting for?
I mean, look, if you look at where the two year rate is the two year rate that's gone from 20 basis points in October to what two seven recently.
That's a bond market that's priced in a lot of this. So why don't we get on with it?
And the bond markets priced in a lot of it without significant cracks in the credit market, the dollars' rally, but not unbelievably. So yes, I
think we should get on with it.
KOSIK: I'm curious where you are placing recession odds for next year?
LEVITT: Look, I mean, in any year, you're one in 10. And when you've got the yield curve, as flat as it is, you, you start moving closer to you
know, one in three probability. The three month tenure still quite wide, though.
And as typically as this - how this plays out is it's not the two tens; it's when the Fed flattens the yield curve from three months to 10 year and
so will likely be there by early 2023? History suggests that you're then 12 to 18 months from a recession.
But we're moving quickly here. And I think the hope is my hope is that inflation moderate fed backs off and the cycle can continue.
KOSIK: All right, Brian Levitt thanks for your time today. Thanks for your perspective.
LEVITT: My pleasure. Thank you.
KOSIK: And the market opens next.
(COMMERCIAL BREAK)
[09:30:00]
KOSIK: Welcome back, I'm Alison Kosik. The opening bell they're sounding on Wall Street and nothing to fear just yet on this Friday the 13th. U.S.
stocks are trading higher across the board.
The second day of gains for the NASDAQ but tech still down substantially this week, and the Dow remains on track for its seventh straight week of
losses its longest losing streak in decades.
Meantime, shares of Twitter opening sharply lower after Elon Musk's series of tweets earlier today. Musk saying he remains committed to taking Twitter
private. He is however putting his $44 billion deal for the company on hold.
Let's talk more about this I want to bring in Paul R. La Monica. You've been tweeting about this all morning, a little sarcasm here and there. How
can you not? I mean, Elon Musk is negotiating this deal for Twitter, on Twitter and causing such chaos with the stocks.
At this point, do you think that he's losing credibility with Investors because of everything that he's doing to these companies on Wall Street?
PAUL R. LA MONICA, CNN REPORTER: I don't think it's helping Alison. And definitely, I mean, it's hard to say that Elon Musk can ever truly lose all
credibility because he is the world's richest person.
He obviously controls Tesla and SpaceX, he has done a lot in the automotive and go world of space exploration to really still make him an icon in the
world of business, that being said, this behavior on Twitter is erratic, to put it mildly.
And I think Investors clearly are losing confidence. Is this a negotiating ploy? I wrote earlier this week about how some people think Musk would need
to lower the takeover price for Twitter in order to get a deal done that makes economic sense, or is Elon Musk growing bored and going to try and
find something else to focus his attentions on is it becomes a little bit more challenging for him to pull off this Twitter deal, especially if he is
questioning some of the user data metrics? KOSIK: Yes, I mean, he could be entertaining himself with the tweets about straws, of course, which was the
buildup before he got to the tweet about the deal on hold.
And I mentioned companies because we know as we're watching Twitter shares fall we were watching Tesla shares go up. And so it feels just like its
manipulation here. And you wonder where the SEC is in all this. When our regulators go to step in and or at least say something?
MONICA: Yes, the SEC obviously has cracked down on Musk before Alison for some of his tweets, probably the most famous one being the funding secured
when funding wasn't apparently actually secured for you know, a deal that he was talking about to maybe take Tesla, private.
I think that regulators are probably trying to do the best they can to keep an eye on this ongoing developing situation. But Musk tweets so often that
it is hard for anyone and the SEC, let alone the financial media to stay on top of every single utterance from Elon Musk, and what's going to be
happening next and what his true motivations might be.
KOSIK: Yes, but it would be nice to hear something and maybe this time, just this time, we will Paul R. La Monica, thanks so much for your
perspective on this. Bitcoin has bounced back above $30,000 today after a sharp sell off on Thursday, but that doesn't tell the whole story on
Cryptocurrencies.
The big focus this week is on stable coin and the collapse in the value of one coin. TERRAUSD.
They may not be the biggest name among Investors, but stable coins are big money. Their total value was $180 billion in March. Stable coins as the
name suggests, were designed to offer a stable way to enter the Cryptocurrency world, contrasting with currencies like Bitcoin whose values
undergo wild swings.
Some stable coins are pegged in the value to real world assets or currencies, the peg being maintained by reserves of their real assets such
as U.S. dollars, but a more obscure type of coin known as algorithmic stable coins are meant to maintain a steady value through complex financial
engineering.
TERRAUSD was tied to a crypto coin called Luna; traders were able to exchange Tara and Luna coins to forever maintain a value of one TERRA to
$1.
[09:35:00]
KOSIK: But this week that arrangement fell apart the value of Tara collapsing to 23 cents at one point wiping out billions of dollars of
Investors accounts. Joining us now is Charles Cascarilla. He's the CEO and Co-Founder of Paxos.
It's a finance and tech company that specializes in blockchain. Charles Pescarolo, welcome to the show. And I'm so glad to have you on and get your
perspective. The burning question that so many are asking is, does anyone really know yet what happened to set this into motion to cause Tara to lose
its peg to the U.S. dollar?
CHARLES CASCARILLA, CEO & CO-FOUNDER, PAXOS: Great to be on Alison. You know, the answer is we don't know exactly why it happened. But the reality
is it wasn't backed by anything. So it was only a matter of time until this would happen.
KOSIK: Why was it today versus tomorrow or three, three weeks ago? It's, we can't really get to that. But what we can think about is what the way to
really construct a stable coin is?
Ultimately, a stable coin is supposed to be as you were saying something that's backed by an underlying asset. And really, when you want a digital
dollar, why does someone want a digital dollar, they want a dollar that can move 24/7 instantaneously anywhere in the world.
And they want it to be a dollar. And so in order to be a dollar, you have to be backed by dollars, which is basically T-bills in this case, you're
just backed by an algorithm. And you know, at some point the algorithm can't work because it's just based on faith.
KOSIK: How much is what's happening with, with Terra with Luna, and in some cases, a little bit tether although it's come back today, how much is that
sort of casting a cloud over Cryptocurrencies overall?
We did see of course, Bitcoin taking a big hit. It's bouncing back as well. But how much is what's happening in the algorithmic stable coin area
affecting Cryptocurrencies and Cryptocurrencies credibility?
CASCARILLA: Yes, well, I mean, the reality is it is hurting, $22 billion loss in total value, in just a matter of days is a big, it's a big hit. On
the other hand, we shouldn't throw the baby out with the bathwater.
This technology is fundamentally transformative, our financial system needs to be really reformed and shifted so that it can operate at the speed of
the Internet. And it's not doing that today, it runs nine to five and it runs in batch processes, it takes days to move things.
That's not what we want, either. So I think it's important to keep in mind the fundamentals that this is really going to transform how our economy
works. But there's going to be some bumps along the road.
You don't want it periods of creative destruction can be healthy. But even in the internet, you had Amazon go from $100 down to $2 is one of the most
iconic companies in the world right now.
And you know you had pets.com that didn't change the value of internet. We had algorithmic stable coins. It's an unfortunate situation for sure, but
doesn't change the long term of what this technology represents.
KOSIK: Yes, how much do stable coins really? How much, how important are they for the crypto ecosystem as a whole?
CASCARILLA: Well, they're very important because you need dollars in the system in order to move it around. Interestingly, even though everyone
talks about Cryptocurrencies, I can tell you that what the number one product people want around the world is the U.S. dollar.
And the thing is, people want real dollars, they want to know that they're going to really be there for them. And so in the case of Paxos, we issue
two different stable coins. One is called USDP, and the other is BUSD.
And I think there are some really fundamental differences in how we have built our products in order to serve this really important need for how can
you move dollars at the speed of the Internet?
And there's really a couple of things that differentiate are the first is you fully reserved? Are you fully backed by T-bills, not by even U.S.
government bonds that can fluctuate in value, or commercial paper or mortgage backed securities?
How you can be truly a dollar at any moment in time, and that is a promise that we absolutely make to all of our customers. The second thing is you
don't have to believe Paxos because we're fully regulated.
We're the only firm that is issuing a regulated stable coin. We have a primary regulator. The New York State Department of Financial Services, one
of the best financial regulators in the whole world.
So you don't have to believe Paxos you can understand that we have oversight and no one else does. And I think the last thing is, it's
undisputedly the safest stable coins in the world are Paxos stable coins.
Nothing that what happened with Luna can happen to Paxos stable coin. That's because we construct it a certain way we have oversight. And so
there can be real confidence to use this product. And it really is transformative for the world.
KOSIK: You know, Janet Yellen called stable coins a threat to financial stability, and she wants regulation. Is Yellen wrong?
CASCARILLA: No, I think she's right, that you need to have regulation. And if it's built incorrectly, you can have instability. That's what we saw
with Luna Tara. 100 percent, I think she's making it an accurate point. It's one that we really support.
That's why we alone have built this regulated, stable coin suite of products that is so much different from what others have done. Because the
idea is you should be able to have a dollar that moves like the internet, but you should have a dollar that you can believe in and trust.
How do you marry those two concepts together? In our view it's by being regulated by having oversight by not just having to believe Paxos but by
knowing that there are other people who are making sure that what we say is actually what we're doing.
[09:40:00]
KOSIK: All right, Charles Cascarilla, CEO and Co-Founder of Paxos, thanks for joining us.
CASCARILLA: Great to be here.
KOSIK: And from digital currencies to the power of tech in the real world will speak to the company using drones to get lifesaving supplies to people
in Ukraine.
(COMMERCIAL BREAK)
KOSIK: Modern day tech to help people affected by modern day warfare. That's the mission of drone company dragonfly, which is teaming up with a
medical devices supplier to get crucial equipment to people in Ukraine.
It could be a lifeline for people in hard to reach areas. The drones can carry up to 35 pounds of temperature controlled items like insulin, blood,
vaccines, and first aid kits. And they can also enable vital search and rescue operations.
Cameron Chell is Dragonfly's CEO, and joins us now. Cameron thanks for being with us.
CAMERON CHELL, CEO, DRAGONFLY: Thank you for having me.
KOSIK: Talk us through how many of your drones have already been in Ukraine and how many more are going and what they're doing there?
CHELL: So the first shipment of drones arrived late last week where we completed our training admission profiles with the pilots that are on the
ground there. There's up to 200 drones that will be delivered before the end of summer.
They're somewhere in the neighborhood of 15 to 18 that are either in theater or on their way to theater currently.
KOSIK: And talk to me about what they're carrying. I understand obviously, they're carrying medical supplies, but are they carrying other supplies as
well and what about search and rescue? What kind of role are they playing there?
CHELL: Yes, there are three primary drones that we're actually putting into the area. The first or the most prevalent drone is what we call the MRD the
Medical Response drone. So this is a unique drone the Dragonfly is developed that carries this 35 pounds of temperature sensitive supplies
into besieged areas primarily at the moment.
The biggest call that is required is for insulin and antibiotics. People that are obviously diabetic and can't get access to insulin are those many
of which are injured and are facing risk of infection.
But there are even calls for things as simple of just getting water into certain places. So that's the primary function these are drones that can
operate from up to 20 kilometers away, so it keeps the operators at a safe distance.
[09:45:00]
CHELL: They have full optics, they can see everything that's going on, the drones can either land and the packages can be removed, or they can be
dropped from a safe distance as well. And the drone can get out of theater quite quickly. There's also sorry.
KOSIK: No, no finish your thought, finish your thought.
CHELL: Well, there's also a search and rescue drone, which is a smaller drone, which is very, very fast, and carries thermal sensors, which are
used primarily to look for people that are in debris situations to save time.
They're looking for heat signatures, some of our technology can even read the vital signs of people that might be in those situations. And we have a
third drone that flies at a very high altitude.
It's a vertical takeoff horizontal flight drone that really provides situational awareness and reconnaissance for the search and rescue teams to
ensure that it's not danger coming in from outside areas as they're doing search and rescue missions.
KOSIK: You know, clearly these drones are going in where it's dangerous territory. And in your earnings call, you talked about how this is not just
a feat of engineering, but it's also, you know, you have to tackle logistics and training too. How do you keep these drones safe to get to
where they need to go to bring these vital supplies and do the vital work?
CHELL: You raise such a good point. You know, the engineering and the work and the project management all combined to be able to provide a platform
that can ensure that there's some humanitarian aid getting into this area and saving lives.
The pure logistics of getting the equipment in, in a regulated manner in a manner that everybody knows that safe, they know that these aren't
combatant type of drones and such.
And then doing the training of the personnel are, it's a big, big lift; the engineering just seems almost pale by comparison sometimes. However, that
being said, that's a really important part of the overall mission profile.
And something that Dragonfly is really specialized in. You know, in terms of keeping these drones safe, the reality is, right now getting ambulances
or equipment into these areas just as impossible.
They either get shot, they get confiscated, they can't get through debris or such. And so you bring these drones in from a safe distance. And we've
had a lot of questions and people saying what if they get shot down or whatever, they get destroyed.
But who cares is send more like the reality is these drones cost a fraction of the cost of the ordinance that are used to destroy these areas of these
buildings. And so, you know, if a drone gets shot down, we'll send five more.
I mean, that's just the beauty of this technology and how it scales and really the return on investment of saving lives. It's just, it's just so
incredible for the soccer, you know, for what we're able to provide.
KOSIK: Are these drones collecting data?
CHELL: These drones are not, they certainly could collect data. And they are providing us optical awareness and situational awareness of the
environment. So it enables us to be able to get the equipment to where it needs to go.
But these drones are designed for humanitarian requirements.
KOSIK: All right, well, it's incredible what these drones are doing. It's such a pleasure to have you on the show today, Cameron Chell, CEO of
Dragonfly Drones. Thanks very much.
CHELL: Thanks for having us.
KOSIK: Nearly three dozen German shepherds have been rescued from the war in Ukraine. According to our CNN affiliate KFMB, a California trainer
traveled alone to Ukraine to rescue the dogs, which are police and military trained K9s. Chris Jiminez raised around $55,000 to charter a plane and
bring them all to San Diego County.
(BEGIN VIDEO CLIP)
CHRIS JIMINEZ, DOG TRAINER & RESCUER: Now the dogs need to go through some extensive rehab. They've been shoved in a car for hours, shoved on a plane
they were in bad condition when I showed up.
(END VIDEO CLIP)
KOSIK: Jiminez is trying to find homes for the dogs but says they must be the right fit. Leaving Shanghai is oppressive COVID-19 lock down. CNN's
David Culver was sealed inside his home for 50 days. Next, he takes us on his one way journey out of China.
(COMMERCIAL BREAK)
[09:50:00]
KOSIK: China now banning citizens from going overseas for non-essential reasons. Its part of the regime's controversial zero COVID policy with much
of the city of Shanghai still under a severe lockdown. CNN's David Culver has just left China for the first time in two and a half years. Here's his
story.
(BEGIN VIDEOTAPE)
DAVID CULVER, CNN CORRESPONDENT (voice over): A fatigue frustration you can't go outside that door, the huge issue and tired Julia.
CULVER (on camera): Here we are, mourning of leaving Shanghai in the midst of what's been now 50 days in lock down.
CULVER (voice over): Leaving Shanghai today is a onetime one way journey. Heading out for the first time since mid-March, it all feels so strange.
CULVER (on camera): A few people you see at the - most of them are head to toe in hazmat suits. As we look on the streets, the roads are still
blocking off a lot of the sidewalks stores basically all closed.
CULVER (voice over): With a government permitted driver we pass through checkpoints or documents thoroughly inspected including a letter from the
American Embassy. Many expats like me needing diplomatic letters just to leave our apartments.
Once vibrant and rich with energy, Shanghai was forced into an induced coma. The rolling lockdowns began in mid-March. But by April, this city of
more than 25 million people was under strict harsh lockdown, most of us sealed inside our homes. Community COVID tests after test, after test and
in between at home COVID tests.
CULVER (on camera): I've done quite a few of these.
CULVER (voice over): Early into the lockdown I packed to go back for me and for my dog. If I tested positive I'd likely end up at a government
isolation center like this, or worse like this.
Most of us would prefer just to recover in the privacy of our home. But in China's are zero COVID worlds. That is not an option. Shocking scenes of
people shouting we are starving. We are starving.
Heartbreaking stories of people being rejected medical care, some of them later dying, all because hospital workers feared breaking unforgiving zero
COVID protocols. When it seemed Shanghai is handling or mishandling reminded me of Wuhan. On January 21, 2020, we traveled into the epicenter
of what was a mystery illness.
CULVER (on camera): It's the wildlife and seafood market.
CULVER (voice over): Still fresh in our minds the perseverance of those in Wuhan who lived through the original lockdown. Some losing loved ones to
COVID early on. They risked their freedom to share with us their pain filled stories, furious with their government for not doing more to stop
the initial spread.
Chinese officials maintain they were transparent from the start. And in recent days, President Xi Jinping has reaffirmed and praised his country's
zero COVID efforts vowing to fight any doubters and critics.
Over the past two years we've lived through China's military like mobilization rapidly building hospitals, mastering mass testing of 10s of
millions at one time, designing a sophisticated contact tracing system likely to be kept in use to watch over every move of 1.4 billion Chinese
long after COVID and also essentially sealing off their borders to the outside world.
Wanting to keep on the story, I have not left China since 2019, making this departure a long overdue homecoming visit. Shanghai's Pudong International
Airport once among the busiest in the world is now a lonely experience.
[09:55:00]
CULVER (voice over): Only two international flights slated to leave on this day. On the floor sleeping bags and trash were stranded travelers have
camped out; wait here for days or weeks for a flight out.
Outside on the tarmac, strict COVID protocols and sanitation in place, ground crews spraying each other with disinfectant. The weeks have built up
anxiety induced adrenaline begin to ease boarding the near empty plane. It finally starts to feel real.
The disorder, despair, the chaos, the anger, the exhaustion, all of it feels so distant now, with a sigh of relief and a bit of survivor's guilt.
Leaving behind a country amidst almost unprecedented changes, I wonder if China's tightening zero COVID restrictions, coupled with rising tensions
with the West will keep its shuttered doors from ever reopening. David Culver, CNN back home.
(END VIDEOTAPE)
KOSIK: Such a good story in the first person. That's it for the show. I'm Alison Kosik follow me on Instagram and Twitter at Alisonkosik. "Connect
the World" is next. I'll see you soon.
(COMMERCIAL BREAK)
END
