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First Move with Julia Chatterley

Amazon Buys the Maker of James Bond for Almost $9 Billion; President Lukashenko Accuses the West of Strangling the Nation with Sanctions; CEO of Leading U.S. Bitcoin Miner Marathon Digital Discusses How to Clean Up Crypto. Aired 9-9:45a ET

Aired May 26, 2021 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:13]

JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.

Boxes to box office. Amazon buys the maker of "James Bond" for almost $9 billion.

Belarus backlash. President Lukashenko accuses the West of strangling the nation with sanctions.

And cleaning up crypto. The CEO of leading U.S. Bitcoin miner Marathon Digital discusses how.

It's Wednesday. Let's make a move.

Welcome once again to FIRST MOVE. Great to be with you. Today, we're all about the U.S. corporate giants facing the globally warmed hot seat.

Huge stakes for energy giant ExxonMobil, it faces a historic shareholder vote that would force them to speed up investments in sustainable energy.

Bitcoin miners, as I've mentioned, are also at a climate crossroads. We'll hear from the CEO of one of the biggest U.S.-based, Marathon Digital

Holdings, who is targeting an ambitious goal of 70 percent carbon neutrality by next year.

The big question is of course, what the heck is Bitcoin mining? Think coding on big computers. How do you clean it up? Well, you use more

renewable energy to power those computers. But remember, as we've discussed on the show, when 65 percent of mining is actually done in China, at least

for now, what difference will it make globally really?

Lots to discuss. Now something that's already green? Well, the Wall Street majors after a mild pullback Tuesday, the German DAX also sitting at fresh

records, up almost 13 percent year-to-date, and outperforming the S&P 500 year-to-date, therefore.

Also green, gold rising for a 10th day with Wall Street making the case, it is actually a better inflation hedge than Bitcoin at this moment that's

also been boosted by the recent weakness in the U.S. dollar. The greenback In fact, hitting its lowest levels against the Chinese yuan in some three

years, which is another way for China to tame rising prices by keeping a lid on the costs of imported goods. Corn, the latest casualty, in fact,

hitting one-month lows yesterday on oversupply issues -- you don't hear that often.

Steel continues to ease, too, after China's pledge to rein in commodity speculation.

There's lots of news. Let's get to the drivers.

And it's breaking news from Hollywood this hour. Amazon will acquire the iconic MGM media company for a purchase price of $8.45 billion. Paul La

Monica has been pouring over the details. And Paul it literally just broke, so I know you're looking at this. But of course, there was wide speculation

for the past week or so. What more can you tell us?

PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, this is not a huge surprise, Julia. As you pointed out, there had been the chatter that Amazon was

looking to do this deal, and there, I think there are a lot of expectations of increased consolidation in the media sector ever since our parent

company, AT&T announced the plans to spin off WarnerMedia into a new entity degree combined with Discovery.

So that is something that I think investors are clearly trying to put the puzzle pieces together and figure out which media assets that are currently

independent might make sense with larger companies, be it tech firms like Amazon or Apple or other media giants like Netflix and Disney.

So Amazon doing this deal, it is all about streaming, I think. You now add a huge amount of content to the library, potentially for Prime video

subscribers, including, of course, the "James Bond" franchise.

CHATTERLEY: Of course, and there's a smash and grab going on in the streaming space to try and get their hands on that intellectual property,

whether it's TV content, or whether it's movie content, too.

And Paul, you mentioned, one of the magic words there, which is Apple, which was allegedly eyeing the MGM assets as well. Another one, perhaps NBC

Universal. What's the likelihood that we get others coming into this space with deep pockets? It doesn't get deeper than Apple if they want to buy

this and it is at the top end of the speculated purchase price, too.

I don't think that matters to Apple. What do you think?

LA MONICA: Yes, I think Apple, which still has a huge amount of cash sitting on its balance sheet but isn't really earning that much with

interest rates as low. Clearly, it could do a deal if it wants and as you mentioned, I think there are a lot of people in the media industry and on

Wall Street that are wondering what happens with Comcast and NBC Universal? What does ViacomCBS look to do after it just launched it splashy, you know,

revamp of its streaming network, Paramount+.

There's also other movie studios out there, Lionsgate which is, you know, a company that I think potentially could be a fit. It also owns stars,

they're smaller and one of the few remaining independents, does someone like Apple or Netflix make a go for them? I think the puzzle pieces are

still being moved around and it's all about 3D chess in the streaming media world.

[09:05:23]

CHATTERLEY: Yes, a more simplistic smash and grab, more grabbing to come.

Paul La Monica, thank you so much for that.

Okay, big changes for Big Tech in India as new laws regulating social media content apply from today. WhatsApp is fighting back, taking the Indian

government to court in an attempt to block the measures it says would quote, "severely undermine privacy." Clare Sebastian joins me now.

Great to have you with us, whether you're Twitter or whether you're Facebook, of course, the owner of WhatsApp, you don't make a move like this

lightly. It's what -- the second biggest internet market in the world, the biggest market by users for Facebook, I believe, too. Explain what's

happening here and why they're really worried.

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, 400 million WhatsApp users in India, so a key market, a key growth market for Facebook and

WhatsApp is extremely popular, but this is really a nuclear option for Facebook, WhatsApp's parent company, and that is because the rule in

question here where the Indian government is part of a raft of new measures, as you said, they're requiring that messaging services like

WhatsApp can trace the originator, the first originator of what turns out to be a viral or problematic post if law enforcement asks them to.

Now, this, according to WhatsApp out would fundamentally change the entire system. What they have right now is called end-to-end encryption, where the

message that you send is immediately encrypted on your device, and cannot be opened by anyone other than the recipient.

So WhatsApp is saying that if they change that in India, this would change everything for all WhatsApp users, and would fundamentally undermine

people's right to privacy and in a post on what's called Traceability, they explained it further, Julia, they say: "In order to trace even one message,

services would have to trace every message." They say that, "If a government chooses to mandate traceability, it is effectively mandating a

new form of mass surveillance."

So they are clearly putting this end-to-end encryption, this sort of privacy built into WhatsApp above their desire probably to comply with the

Indian government's request. They do value this market, but clearly, they are very worried that this would mean change for the entire system,

something that consumers really put very high on their sort of priority list now, which is that level of privacy -- Julia.

CHATTERLEY: Yes. And they're not the only country trying to tackle this thing. It reminds me of the battle that Apple had in the United States over

suspected terrorists, and they wanted to unlock that phone, if you remember and that was years ago, but it started this debate over how far privacy

extends and encryption, in particular for these extends.

But at some point, you have to take and you have to force these social media giants to take greater responsibility for the content that's out

there, and I think finding a balance here, perhaps is what India is trying to achieve, and also being accused perhaps at times of overstepping and

policing content with respect to themselves, too.

SEBASTIAN: Yes, I mean, India, like many governments has had really legitimate concerns about the real world impact of posts that spread on

social media apps and on messaging apps like WhatsApp. There were these sort of lynchings in 2018 that were blamed on viral hoaxes that were

spreading via WhatsApp.

And if you remember at the time, Julia, Facebook did bring in a number of measures. They made it harder for people to forward multiple things on

WhatsApp, and they sort of labeled the problematic content on there as well.

But they are stopping short now of breaking into this end-to-end encryption issue. And obviously, the Indian government has had issues particularly

with Twitter in the last few months. Twitter has sort of bumped up against them on issues over which accounts they should take down during farmers'

protests. They were visited -- their offices in Delhi and another city were visited this week after they labeled a post by a prominent member of the

Indian ruling party as manipulated media.

So it's a real balancing act for these companies. We talk about this a lot. But how far do they go to comply with government request if there are any

concerns that it could form some kind of surveillance, censorship or cracking down on dissent -- Julia.

CHATTERLEY: Yes, whack-a-mole. We'll be talking about this for years. Clare Sebastian, thank you so much for that.

To China now where American movie star John Cena is professing his love for the nation after calling Taiwan a country. The island is self-governed, but

China claims its sovereignty, but what also made news was the language he used to make the apology as Will Ripley explains.

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: If you have a brand that you want to be successful in Chinese market, it's a good thing to speak in

Mandarin to the fans, the fan base, and certainly the "Fast and Furious" franchise has a huge fan base in China. They've even talked about possibly

filming part of their finale there in China.

[09:10:01]

RIPLEY: So when John Cena gave promotional interviews talking about the movie and talking about its global debut here on the self-governing island

of Taiwan, he said something that much the world might view as a pretty innocent mistake. Perhaps he misspoke because Mandarin is not his first

language, when he said Taiwan is the first country where you can watch the movie.

Problem is, in the Mainland, it is a big no-no to call Taiwan a country because they claim this island as their own, even though Taiwan has been

governing itself for more than 70 years since China's Civil War ended.

So John Cena went on Weibo where he has 600,000 or so followers and he apologized profusely, saying he was very, very, very, very sorry, and that

he respects China. He really did say that many very-s. But it wasn't enough for some in China who said that he should have gone on and actually

proclaimed that Taiwan is a part of China, but of course, then that would potentially run afoul of some fans here in Taiwan.

So in the end, he is kind of stuck in a no win situation where some are calling for his movie to be boycotted, a movie that made $136 million just

in China over the weekend, propelling it to the biggest Hollywood pandemic box office debut to date. And that is why movie stars like John Cena, and

big brands, airlines, fashion moguls, hotel chains, why they all have to tread very carefully and avoid saying things that cross China's red line,

like Taiwan independence or supporting Hong Kong's pro-democracy movement, or supporting the monks in Tibet or the Uighur Muslims in Xinjian.

Those issues, if entertainment or business steps in, they could be out in China.

Will Ripley CNN, Taiwan.

CHATTERLEY: Okay, let me bring you up to speed now with some of the other stories making headlines around the world.

The President of Belarus lashed out at the West in his first public address since the forced landing of a Ryanair flight on Sunday. Speaking in

Parliament, Alexander Lukashenko says the diversion of the plane was legal, and accused his enemies at home and abroad of what he calls quote, "hybrid

warfare" against the state.

(BEGIN VIDEO CLIP)

ALEXANDER LUKASHENKO, BELARUSIAN PRESIDENT (through translator): As we predicted, our ill-wishers, both outside and inside the country have

changed their methods of attacking the Belarusian state. They have crossed a lot of red lines and transgress the limits of commonsense and common

morality.

(END VIDEO CLIP)

CHATTERLEY: Fred Pleitgen joins us now, and the President calling it hybrid warfare there, Fred, there are frightened citizens that are saying

that the iron curtain is being drawn once again and that says something.

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it certainly does say something and it certainly also seems as though

Alexander Lukashenko is in no mood at this point in time to back down. Of course, he is also himself backed by Vladimir Putin.

It is quite interesting because earlier today, there were several Russian politicians who also came out and said, that they believe that the

explanations that the Belarusian President offered up today when he was in that speech in Parliament for why that jet was forced to land were

reasonable as they put it to them, it was quite interesting, because one of the things that he said is he said that the alleged bomb threat that the

air traffic controllers in Belarus had communicated to that Ryanair plane, they said that originated -- he said that originated from Switzerland.

Now, it is interesting, because before that he had said or the Belarusian state, I should say, had said that it was Hamas who had issued that threat.

That of course, led to Hamas saying no, that's absolutely not true. So we're hearing a new explanation there from Alexander Lukashenko.

He also claimed that the plane was flying close to a nuclear power plant. He also claimed that several other airports, for instance, in Poland and in

Vilnius has not allowed the plane to land. So far, we haven't been able to confirm any of that.

But you're absolutely right, he lashed out at the West, he lashed out at the opposition, and he said that Belarus would continue to fight hard

against anybody who tried to undermine, as he put it, the state and obviously that meaning undermine himself.

Meanwhile, from what we're seeing, the West or the European Union, in particular, upping the ante as well. I've been keeping an eye on air

traffic in and out of Belarus and it certainly seemed as though there's very little going on. So a lot of those measures that the U.S. said that it

would put in place seem to be starting to really go into effect, Julia.

There's also talk of possible new sanctions and it was quite interesting, because the opposition leader, Sviatlana Tsikhanouskaya, just a couple of

hours ago, she was at the E.U. Parliament's Foreign Relations Committee, and there she advocated for the E.U. taking an even harder line against

Alexander Lukashenko.

She criticized the E.U. for being too soft. She also called for the E.U. to stop importing certain goods from Belarus, like for instance, oil and

timber. Now, that of course could also have a big effect on the Belarusian economy.

Unclear however, whether or not that would have an effect on Alexander Lukashenko or cause him to sort of change his ways. So far from what we're

seeing as far as Roman Protasevich, the journalist who remains in custody is concerned really doesn't seem as though there's a lot of movement on

that front -- Julia.

[09:15:03]

CHATTERLEY: Fred Pleitgen, thank you so much for that update there.

Okay, meanwhile, a hurricane force cyclone has made landfall on India's northeastern coast. Officials say at least two people have been killed, and

more than a million others evacuated from the area. A storm surge, more heavy rain and flash flooding are expected in the coming hours.

Tropical Cyclone Yaas is the second deadly storm to hit the nation in the past eight days.

The U.S. Secretary of State has met with Egypt's President to reinforce a ceasefire that ended fighting in Israel and Gaza. It comes the day after

Antony Blinken pledged support for rebuilding Gaza during talks with the Israeli and Palestinian leaders.

In the next hour, he will meet with officials in Jordan.

Okay, still come here on FIRST MOVE, the carbon cost of crypto, the CEO of one of America's leading Bitcoin miners on the company's plans for carbon

neutral crypto mining.

And to Japan where an official partner of the Olympic Games is calling for them to be canceled. We're live in Tokyo with the latest.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to FIRST MOVE live from New York where U.S. stocks remain on track for a higher open, the major averages were softer in

Tuesday's session amid concern that soaring U.S. home prices might crimp housing industry growth, but popular Reddit names had another day in the

sun, GameStop and AMC Cinemas all up sharply yesterday and set to rally once again today. Wow, those are some steep gains.

Bitcoin is also higher and testing the $40,000.00 level. Bitcoin up some 25 percent in fact from the lows hit during last week's volatility and

selloff.

Now, also topping the agenda is crypto mining's carbon footprint. And over the weekend, MicroStrategy CEO, Michael Saylor convened to North America's

leading Bitcoin miners and Elon Musk to discuss crypto's environmental impact. Among those represented on the call was Marathon Digital Holdings.

The crypto miner has just unveiled plans for a new hub in Texas, which it says will make their operations 70 percent carbon neutral by 2022. And

joining us now is Fred Thiel, the CEO of Marathon Digital Holdings. Fred, fantastic to have you on the show.

I know you weren't present on the call, it was your President that actually attended, but what can you tell us in terms of that call and perhaps what

role Elon Musk played, too.

[09:20:03]

FRED THIEL, CEO, MARATHON DIGITAL HOLDINGS: Well, it was our Chairman of the Board who was there, Merrick Okamoto, so I think the call's purpose

really was to help Elon understand really how power is used by the Bitcoin mining industry and the Bitcoin mining industry's commitment to using

carbon neutral power as evidenced, really, by our announcement on Monday morning, regarding our new center in Texas, as you mentioned, which is 70

percent -- overall, our footprint will be 70 percent carbon neutral, that particular site will be 100 percent carbon neutral over 250 megawatts.

So we're very excited to come out and now be able to move the majority of our fleet to carbon neutral, and looking forward to over the course of next

year, reach about a hundred percent overall.

CHATTERLEY: We'll talk about that because I do think it's fascinating. But you made an interesting point there, which was just the industry explaining

to Elon Musk, who has been very powerful in commenting about the energy intensity of the industry itself. Do you think he was confused about what

you guys do? And what the implications of what you do beforehand?

THIEL: No, he's a very intelligent man, obviously, I don't think he was confused. I think it's just a question of having the right data at your

fingertips. There's a lot of conflicting data out there.

The Cambridge studies that talk about, you know, hundreds of thousands of terawatts of consumption. And it's really just trying to separate the wheat

from the chaff and look at what is really renewable and the data around the fact that the industry has moved, or is moving towards really 70 percent

carbon neutral or renewable energy sources.

Outside of China, actually, a majority of the energy being consumed is moving more towards carbon neutral in the Bitcoin mining industry. And I

think we're going to continue to see that, everybody in the industry is certainly very dedicated, not just to being transparent. This is kind of

one of the reasons for the formation of this group is to really be transparent about energy use to educate the marketplace about how Bitcoin

mining is really an energy consumer of last resort, and we use a lot of energy that otherwise would be wasted.

For example, you may not be familiar with the fact that five to eight percent of all power generated in this country is lost in transmission

lines. Just that power alone is over 200 gigawatts.

So you look at a miner like us who consumes at max capacity under 500 megawatts, it really -- you get a sense for the scale where Bitcoin miners

really don't consume huge amounts of energy that is harmful to the environment, a lot of our energy consumption are renewable sources, and

carbon neutral.

And as we continue to move towards carbon neutrality, I think it will be really an enabler for the industry that provides renewable energy to try

new technologies, we are able to consume power at baseload, which is right at the source of power. So we can do a lot to help the renewable energy

developers and technologists and I think part of the meeting was also to really try and chat with Elon about what he could do to help the industry

become more renewable.

CHATTERLEY: What do you think he can do to help the industry?

THIEL: Well, Solar City is part of Tesla. So obviously, solar power generation is something that is a technology that they have. Tesla has huge

experience in utility scale battery storage, which is critical to the industry. So I think he clearly has his -- has access to technologies that

would be helpful, and I think that the industry would love to work with him to try to bring those technologies into greater use, especially for Bitcoin

mining.

CHATTERLEY: You made a great point, and that is that the big U.S. miners are very much focused, you, in particular, on cleaning up the energy usage

and moving to renewable energies. But that data suggests that 65 percent of mining is done in China at this stage and we have seen a number of pools, I

know, shut down or reducing in recent weeks.

Fred, what do you think happens to mining in China? Do you think we see a more significant crackdown? And will that shift mining to the West?

THIEL: Well, I think we're already starting to see it and there are a couple of kind of indicators, if you would. One is the global hash rate. If

you go back a few weeks ago, there was a shutdown in China of many coal- fired plants because of an incident at a coal mine and we saw the global hash rate drop considerably.

We're seeing an almost similar trend now as miners in China are starting to either decommission certain mining operations and try and move their

operations outside of China and beyond the arm of the Chinese authorities.

So, I think if you look at the global hash rate, you'll see a continued kind of lowering of it to a certain extent over time until those miners are

able to transition. But I believe the Chinese authorities are very serious in enforcing it. They have two initiatives they'd like to meet, I believe.

One is meeting the climate accord goals that they have which are fairly strict.

And Inner Mongolia is actively now starting to develop the processes, if you would, for enforcing these rules. So as soon as you get to the level of

actually doing enforcement, I think they're quite serious about it and I would expect Inner Mongolia coal mining or Bitcoin mining to cease over the

next few years.

[09:25:15]

CHATTERLEY: Does the price of Bitcoin and the short-term volatility matter for your investment plans, Fred? Do you have a sort of forecast of where

you see Bitcoin prices going, whether it's one year out, two years out, five years out?

THIEL: It's a great question. I think as you look at Bitcoin mining, it's the ultimate scarce resource there are and ever will be, only 21 million

Bitcoins ever available. Today, we have about 18.9 million that have been mined, a certain percentage of those have been lost in wallets where people

don't have the keys to them anymore. And there are only currently 900 Bitcoin made per day or rewarded per day to miners.

So the industry is really focused on the more the price of Bitcoin goes up, the more profitable mining is, the more incentive people have to go into

the mining business.

That has two effects. One is the share of rewards decreases on a participant basis as the overall hash rate goes up, which forces the miners

to continue to invest in more hardware, more power, et cetera, and we are very focused on maintaining our share in the marketplace, we believe that

where Bitcoin is today is a good level and it has plenty of runway to go forward.

There's certainly good support at the 35,000 levels as has been viewed this past couple of weeks with the price declines. So you know, our forecast on

pricing is it's in a good spot. We think it's going to get better.

Fan investment perspective, we're going to continue to invest.

CHATTERLEY: How much better?

THIEL: Yes, I'm not going to -- I'm not going to put okay a hundred thousand million dollar price out there. This is a commodity that is in

scarce supply that is still proving its mainstream nature. As institutional investors come into the market that will stabilize prices. As price

volatility decreases, the asset will become more interesting to investors and maybe less so to speculators, but certainly more interesting to

institutional investors.

And we're really very focused on bringing these revolutionary technologies like Bitcoin blockchain, into the financial markets and into the financial

world because there's so much that can be done today using blockchain technology to help society.

It really is kind of like what the internet was in the late 90s. We believe it's that level of revolutionary technology, and it'll have a huge impact

on everybody's lives.

CHATTERLEY: Fred, very quickly, you talked about transparency earlier. Do you think this was -- this meeting was handled badly? A bunch of big guys

getting into a room secretly being announced on Twitter. There were a lot of people that said even using the word counsel was painful.

You've been compared to an oil cartel doing this from a sector that's supposed to be decentralized. It felt very sort of lobbyist centralized,

being overtaken by the big players. What's your response to that?

THIEL: You know, I think any time in the industry, especially at this young stage is in development, there comes a point in time where many of

the participants form around a common interest. That doesn't mean it's exclusionary in any way. I think the intention of this group is to be very

inclusive.

I think, really, it's a question of defining the identity of the group before inviting in millions of miners, and really understanding how best to

serve the industry. Unlike OPEC, Bitcoin miners don't control price. Unlike OPEC, this group is less than 20 percent of the global mining capacity, so

they definitely don't have any monopoly on that.

You know, Bitcoin is a very interesting marketplace because there is very high demand, the product is the exact same no matter who sells it. There's

no product differentiation. It's all an operational excellence business, and how can we be better operators of our business? Well, renewable energy,

carbon neutrality is a key thing. Transparency is huge.

I believe the industry to be very clear about exactly how much power each player uses and what their sources are. That certainly make it --

CHATTERLEY: And you make a great point, and I have to -- I have to finish there, but there will be people who push back at this and I have to say it

that there were people around that table that can move the price right now by 10 percent, 15 percent, 20 percent with a tweet, and that made it feel

exclusionary.

But Fred, we will continue this conversation. Thank you for explaining. Fred Thiel there, the CEO of Marathon Digital Holdings. Great to chat with

you today. Thank you.

Okay, the market opens next, stay with us.

(COMMERCIAL BREAK)

[09:32:35]

CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are open for trade this Wednesday, a historic day in fact on Wall Street. It is the 125th

Anniversary of the Dow Jones Industrial Average, the Dow acting pretty spry for its age in early action, it is rising along with the rest of the Wall

Street majors. Banking stocks, holding steady, too as investors await closely watched testimony from financial CEOs on Capitol Hill later this

morning as well.

And another check of our top story, Amazon shares have opened higher on news that it is finally bonding with MGM. Amazon announcing an eagerly

awaited deal to buy the famed movie studio and home of "James Bond" for $8.4 billion.

The acquirer rising there, so the purchase price just got cheaper. Nice.

Now to the Fintech company offering credit for startups and rewards in crypto. Corporate card provider, Brex, has grown exponentially since its

last appearance on FIRST MOVE. It now has a valuation in excess of $7.4 billion. That's more than double its previous private valuation, that

confidence comes despite a phenomenal churn rate.

Brex assumes 70 percent of its businesses customers will go bust every couple of years.

Now it is offering rewards in Bitcoin and Ether. Well, timing is everything.

Henrique Dubugras is cofounder and CEO of Brex. Great to have you on the show. Just remind our viewers exactly what you offer these customers, these

startups and what kind of growth you've seen in the past year.

HENRIQUE DUBUGRAS, COFOUNDER AND CEO, BREX: Thank you so much for having me, Julia. So Brex, we do all in one finance for businesses, and what that

means is we can do your corporate card, your business account, your expense management, and your bill payments all in one place.

We're not only for startups anymore, we actually serve any kind of business in the U.S. right now and we announced recently the launch of our crypto

rewards in which today, as you accrue your points with -- that you could originally transfer as cash and miles, you can now also transfer to Bitcoin

and Eth.

CHATTERLEY: Okay, we're going to get to that point. But I want to mention, just to give people a sense of your risk management because this is key. If

you're offering a credit card or credit services in particular to a startup, you have to be really ruthless and make some big assumptions about

the loss rate here and I mentioned you assume around 70 percent of your customers are going to go bust every couple of years.

DUBUGRAS: So the churn rate depends a lot in the industry, right? In startups, I think that's probably around right and most startups don't

work, but the ones that do work, they end up paying for all the rest similar to how it works in venture capital.

[09:35:13]

DUBUGRAS: The way we control risk is using our real-time underwriting mechanism in which we're ingesting real time data from our customers, so

their revenues, their balances, their costs, and making real-time credit decisioning.

And that works really well for startups that can grow really fast or go bust, you know, pretty quickly. But at the same time, even if our startups

are having a hard time, we try to work with them to go through tough times. So it's not like we just cut the credit limits out of the blue.

Anyway, so that's kind of how we do our, you know, actually most big banks and American Express because of the way we do our risk management.

CHATTERLEY: Yes, I mean, this is a critical point for me when I try and understand how the business works.

What can you tell us about the new customers that you've added, if you're seeing 80 percent growth in the number of customers that you're adding? Are

these new, new startups? Are these established startups that simply want greater access to money and like this kind of products that you're

offering?

DUBUGRAS: These are mostly small and medium sized business. So we've only served startups until December 2020 and then we open up for any business to

be able to sign up, which is a recent addition. And with that, there's a lot of other businesses that are not venture backed, and now signed up and

can take advantage of Brex. So a lot of the growth came from that segment.

When we look at startups, the number of new startups is pretty constant, you know, there's a pretty constant number of startups being created every

year. But the ones that work out, they grow a lot, but that's the beauty of our business, they just we retain the startups that grow with us.

CHATTERLEY: Okay, let me talk about the reward schemes now, just explain a bit how that works, and why you've added Bitcoin and Ether and our company

is already taking cryptocurrencies as rewards, and how do you manage the risk of the kind of volatility that we've seen over the last couple of

weeks in particular.

DUBUGRAS: So we believe that Bitcoin and Ether rewards is a good way for businesses to get some exposure to it. We don't take the volatility risk

because we just allow customers to transfer their points into Bitcoin into their own business or personal wallets.

But -- and we were committed to educating our customers on the risks that comes with that and they can make their own educated decision. And it came

from our customer just asking us, hey, we would love this and we decided to build it.

CHATTERLEY: So what kind of education are you providing?

DUBUGRAS: We have resources and a website and blogs explaining about cryptocurrencies and how the prices can vary up and down, how it works, to

basically educate our customers around the risks and the rewards that come with it.

CHATTERLEY: Do you think -- and are they talking to you about the prospect of using crypto in some form for payments going forward? Is that where you

think we're headed? Because that's one of the big debates out there right now, particularly in light of what we've seen.

DUBUGRAS: So my personal opinion is that yes, crypto are going to go through payments. But as Brex, we try to not have too much of an opinion

there, we just give flexibility to our customer to do whatever they want.

If they want to transfer to their own wallets to make payments, they totally can do that. They just want to accumulate as an investment, they

can also do that. We aim in having total flexibility.

CHATTERLEY: But you're not planning to have any kind of digital asset Bitcoin on your own balance sheet at this stage?

DUBUGRAS: We don't have any plans to announce at this stage, no.

CHATTERLEY: Just checking. We mentioned your valuation and how quickly that's grown over the past year and a half to two years. What are you

thinking potentially about a listing? Or is it still too early to be having the conversation, Henrique?

DUBUGRAS: So we actually depend on maybe a lot of stars, we want to be a public company. But one thing to remember is Brex is only four years old.

Even though we got to this valuation, we started in March 2017, so we still have a little bit of time to mature our business to be ready for a public

listing.

CHATTERLEY: Yes, so it's a case of watch this space and it's incredible what you've grown over a four-year period. We remember it from the

beginning.

Great to have you with you.

DUBUGRAS: Thank you.

CHATTERLEY: Thank you so much for joining us today on FIRST MOVE, the cofounder and CEO of Brex there.

All right, to Japan now where a national newspaper and official Olympic partner has called for the games to be canceled. "The Asahi Shimbun" says,

"We don't think it makes sense to hold the Olympics and Paralympics in Tokyo this summer. The distrust and opposition towards the ruling

government, the Tokyo government and Olympic officials are widespread as they haven't tried to address people's doubts and concerns."

Selina Wang is in Tokyo for us. Selina, that is a bold, big statement but I have to say as we've discussed this, day after day and week after week,

it's actually the breaking news it will be finding someone who thinks doing the Olympics is a good idea outside of the IOC and the Tokyo government.

What's going on here?

[09:40:11]

SELINA WANG, CNN CORRESPONDENT: Julia, that is right, but this is symbolic. It is significant because this is the first major newspaper to

call for a cancellation of the Games, and it's also an official Olympic sponsor.

So the real question here, Julia, is if this leads to a cascading effect of other sponsors speaking out, and I spoke to a political scientist who

studies the Olympics, Jules Boykoff and he tells me that this is a remarkable act. It is breaking this corporate code of silence for the

sponsors to potentially urge a cancellation as well.

And this editorial as you say, it was scathing. It asked the question of what is even the point of the Olympics if it is being held against the will

of the public, and if it is putting people's health on the line.

Now, "The Asahi Shimbun" here is known to often be critical of the conservative ruling party, it is known to be a left leaning newspaper, but

it is also the second wider circulating newspaper in Japan. It is very influential, and it is part of this growing chorus of calls not just from

the public, but now from this sponsor, as well as from investors and business leaders, high profile leaders, saying that the Olympic Games don't

make sense.

You now even have U.S. public health officials saying that there needs to be an urgent action taken to look at the risks associated with the Games.

They say that the Olympic plans are moving forward without being informed by science, warning that it's not just a risk about getting COVID in Japan,

but also spreading those other variants around the world when those athletes return to their home countries.

And those concerns from the U.S. public health experts are also echoed here in Japan with the medical community with a group of 6,000 doctors urging

for these Games to be canceled. Just about two percent of the Japanese population has been fully vaccinated. Tokyo and large parts of this country

are still under a state of emergency.

And in parts of the country, the medical system, doctors in Osaka, for instance, are warning of a system collapse, where there are hospitals with

beds and ventilators that are running out.

But despite all of these concerns, Julia, the IOC here is the real decision maker, and they continue to reiterate that they are confident that these

Games can be held safely and securely. And in fact, the Tokyo Board meeting just had a conference today that wrapped up and they said they believe

they're managing the risks properly -- Julia.

CHATTERLEY: Yes, we have 10 seconds. Selina, what's your gut? Do you think it goes ahead, even without spectators?

WANG: It's really difficult, Julia, because every day, I get conflicting information from sources from the media, from sponsors, from the public,

but IOC again, they're saying it's happening. They are not pulling the plug.

CHATTERLEY: We are going ahead. Wow. Selina Wang, great job. Thank you so much for that.

And that's it for the show. Stay safe as always, and we'll see you very shortly.

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