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First Move with Julia Chatterley
U.S. Embassy Urges Americans to Get Out of Ukraine Immediately; Zelenskyy Vows Ukrainian Flag Will Fly Again in Occupied Areas; Memorial For Daughter Of Putin Ally Killed in Car Bombing; Euro Drops to Two-Decade Low Against U.S. Dollar; Chinese Cities Look for Ways to Cut Power Consumption. Aired 9-10a ET
Aired August 23, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(COMMERCIAL BREAK)
[09:00:00]
ALISON KOSIK, CNNI HOST: A warm welcome to "First Move". I'm Alison Kosik, great to have you with us on today's program.
The U.S. State Department advising Americans to leave Ukraine immediately, fearing a ramp up of Russian attacks ahead of Ukraine's independence day
tomorrow. We'll be live in Kyiv with the latest.
Plus, new trouble for Twitter, a former Twitter executive turned whistleblower says, the firm poses a threat to U.S. national security and
has a big problem with bots, backing up Elon Musk's claims. We'll have an exclusive report.
On Wall Street, U.S. Futures pulling back in the past hour. The major averages now on track for a flat open after yesterday's across the board
sell off that saw tech stocks fall more than 2.5 percent, the worst day on Wall Street since June. Stocks dropped as yields on the benchmark us 10
year Treasury rose above 3 percent again, reflecting all the nervousness ahead of this week's Central Bank summit in Jackson Hole Wyoming.
The S&P 500 has fallen more than 3.5 percent this past week as the summertime rally on Wall Street loses steam. That said, the benchmark U.S.
stock index is still up more than 12 percent from its mid-June lows.
Investors watching oil markets closely as well. Both Brent and U.S. crude are up by about 1 percent after Saudi Arabia warns that OPEC's next move
might be to cut production. European gas prices hitting all-time highs this week too. The economic implications pressuring the Euro which is now
trading below parity with the U.S. dollar. We're going to have details on all that just ahead.
But first, Wednesday we'll mark 31 years since Ukraine broke its ties with the Soviet Union. Ahead of its independence day President Volodymyr
Zelenskyy vowed the country's flag will one day be flown again in areas now occupied by Russia.
(BEGIN VIDEO CLIP)
VOLODYMYR ZELENSKYY, PRESIDENT OF Ukraine (via translator): Today, I'd like to talk not only about the past of our flag, but also about its future. The
blue and yellow flag will flutter again at its home where it's supposed to be by right in all temporarily occupied cities and villages of Ukraine.
(END VIDEO CLIP)
KOSIK: Zelenskyy's speech comes as the U.S. Embassy is urging Americans still in Ukraine to leave immediately, warning it has quote, "information
that Russia is stepping up efforts to launch strikes against Ukraine's civilian infrastructure and government facilities in the coming days."
David McKenzie joins us now from Kyiv. So David, it looks like the likelihood of more aggressive strikes from Russia that seems to be growing.
DAVID MCKENZIE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, that's certainly the worry. And it's something that we've been hearing for several
days now here in Ukraine's capital from both civilian and defense leadership.
CNN was at a press conference with President Zelenskyy and President Duda of Poland. And we posed the question to President Zelenskyy, what
information do they have relating to this possible ratcheting up of strikes on the capital from Russia.
He said it's based on generalized information from partner countries. He said there could be a bigger chance of strikes on Tuesday and Wednesday,
that's today and tomorrow here in Ukraine. It's, of course, a very important moment here in Ukraine, the 31st anniversary of breaking away
from the Soviet Union, as you said, Alison. But there is this heightened alert.
And I think more importantly, there have been practical steps taken by authorities here to lessen the threat. They've asked officials and civil
servants to, in large part, stay away from their offices. You saw that threat from the State Department saying Americans need to leave immediately
because of intelligence they have on possible Russian actions.
And you have Zelenskyy at this presser Speaking to CNN, saying this about any retaliation if there are strikes.
(BEGIN VIDEO CLIP)
ZELENSKYY (via translator): What will Ukraine do if they hit Kyiv? The same as now? Because for me as for the President, and I'm sure that for every
Ukrainian, Kyiv, Chernihiv, Donetsk, it's all the same. All our Ukrainians live there. Kharkiv, Zaporizhzhia, the answer will be the same as these
cities. They will hit us, they will receive a response - a powerful response.
(END VIDEO CLIP)
MCKENZIE: So the worry, of course, is that this could be escalate the war that has been going on for nearly six months to the day. It is worth
remembering, of course, Alison, that there is an active frontline in the South and the eastern part of this country, in the Northeast. And every day
since I've been here, there have been reports of significant shelling and rocket attacks.
[09:05:00]
From both Russian and Ukrainian point of view this war is grinding on with very little specific advances either way. And as it drags on, there is a
fear here or at least a heightened sense of alert that Russia is potentially going to strike deep in the heart of the capital. Alison?
KOSIK: All right, David McKenzie, live for us in Kyiv. Thank you. A memorial service was held in Moscow today for Darya Dugina, the daughter of
a Russian philosopher and close ally of Vladimir Putin. Dugina died Saturday after a bomb planted in her car exploded.
At today's service, Alexander Dugin said his daughter died for Russia's victory. According to state media, Russia blames Ukrainian special forces
for Dugina's death, a claim that Ukraine denies.
CNN's Fred Pleitgen in is in Moscow for us. Fred, what more are you learning today?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi, there, Alison. Yes, and I was at that memorial service where Alexander Dugin spoke
and there were literally hundreds of mourners who came there.
And you know, the atmosphere that we felt there was definitely one, obviously, of grief and of agony, but certainly also one of being charged
up, of wanting revenge and of deep anger as well. To the people there, we have to understand that the folks, most of the ones who came there for the
morning, a lot of them were also very much hardliners, a lot of them were people who want to be tougher on Ukraine, and who are some of them calling
for an escalation against Ukraine.
None of them doubted what the Russian intelligence services have been saying that they believe that the Ukrainians were behind all this, even
though of course, the Ukrainians deny that and say they believe that this was all a false flag operation.
But if you look at for instance, Alexander Dugin himself who, obviously, was, you know, very much in a lot of grief, but at the same time, also,
seemingly was calling for an escalation of Russia's actions against Ukraine as well. Let's listen in.
(BEGIN VIDEO CLIP)
ALEXANDER DUGIN, PUTIN ALLY WHOSE DAUGHTER WAS KILLED IN CAR BOMBING (via translator): The price that we have to pay can be justified by only one
thing, the highest achievement, victory. She lived in the name of victory, and she died in the name of victory - our Russian victory, our truth, our
orthodoxy, our country, and our empire.
(END VIDEO CLIP)
PLEITGEN: So there you have Alexandra Dugin there speaking very openly of a Russian Empire. And there were others who called for - also for a full on
Russian victory, called for a full on war against Ukraine as well, one even bigger than what's already currently going on.
So certainly you do feel a pretty charged up atmosphere among many people who are very prominent and very powerful here in Russia, especially if you
look at, for instance, Kremlin controlled media, but also the upper echelons of politics as well.
In fact, just a couple of hours ago, there was a press conference with the Russian Foreign Minister together with the Foreign Minister of Syria, where
Sergey Lavrov also said that there would be no mercy with those who were behind it. And, of course, the Russians are saying it was the Ukrainians,
the Ukrainians are saying it was not them. But - and neither of those claims, obviously are - you're able to verify.
But it certainly looks as though right now, there's a very charged up atmosphere. And there are a lot of very powerful people here in Russia
calling for an escalation against Ukraine, Alison.
KOSIK: Yes. It's sort of the wait is on to see what is going to happen. Next Frederik Pleitgen in in Moscow, thank you.
The Euro hitting a fresh two decade low against the dollar. It's fallen below $1 for the second time this year. Clare Sebastian is live for us in
London. Clare, great to see you. So what factors are at play here causing this slide in the Euro and is it expected to fall even more?
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, Alison. So as you know, with currencies, two sides to the story. We've got the decline in the Euro and
the rally in the dollar. With the Euro, this is clearly a risk premium, the risks of recession in the Euro area are mounting.
You only have to look, as you were talking about, at the chart of European gas futures, they have been on a tear over the past year, 10 times higher
than they were a year ago, about three times higher than they were right before the war in Ukraine started. And perhaps most striking of all, about
almost doubled in just the past month.
So this is really eating into sort of margins for businesses, it's eating into household bills and the cost of living, all of that dampening demand.
And we just got European PMI numbers today that showed business activity contracted for the second straight month. The cost of living brushes
playing into a reduction in demand there as well. So that's one part of the story.
As for the dollar side, you've been talking about it. We're seeing a sort of risk aversion coming back into the market after the summer rally. The
dollar is a safe haven. Plus, we've got the Jackson Hole meeting coming up at the end of this week. We could see Jerome Powell striking a slightly
more hawkish tone, basically reaffirming his commitment to fighting inflation after a summer of optimism. That we might see a slowdown in
interest rate hikes, all of that playing in.
[09:10:00]
Will the Euro fall further still, I think is the big question here. The consensus among analysts seems to be either it will stay this bad for a bit
or it could go lower still, as the recession risks in the Euro area mount. And of course, the divergence in interest rates, currencies become more
attractive if interest rates in the country are higher. Right now in the U.S. they are between 2.25 and 2.5 percent. In the Euro area they're just
at zero.
KOSIK: All right, Clare Sebastian, thanks very much.
In China, drastic measures to save power are being implemented in some cities as a crippling heatwave continues.
(BEGIN VIDEO CLIP)
KOSIK (voice-over): Look at this video, the Shanghai Skyline going dark as billboards and illuminated signs are turned off to conserve energy. Kristie
Lu stout has the latest.
(END VIDEO CLIP)
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT (voice-over): China is suffering through its worst heatwave since 1961. As officials deal with surging
electricity demand from households and dribbling hydropower output, they're taking measures across the country.
In the megacity of Shanghai, outdoor ads and billboards have been turned off to save power, according to city officials. Even the city's iconic Bund
skyline has gone dark in a desperate bid to save electricity.
In the city of Chongqing over 5,000 firefighters and emergency personnel have been dispatched to put up bushfires caused by the drought and
heatwave. No casualties have been reported. According to local authorities, the fires are being kept under control.
And meanwhile, across the province of Sichuan, the drought has cut its hydropower capacity by half according to state media. So 80 percent of the
province's electricity comes from hydropower. And to make up the shortfall, Sichuan is running its largest coal fired plant nonstop.
Also in Sichuan, a blackout has been extended to cease operations at all factories in 19 of the region's 21 cities through Saturday. Sichuan is a
key manufacturing hub for chips and for solar panels. It's home to factories run by Apple, Foxconn and Intel. And because of the power crunch
in Sichuan, car makers in Shanghai have been hit by supply chain disruptions and impacted production at their factories. Affected carmakers
reportedly include Tesla and SAIC Motor China's largest automaker, which operates joint ventures with Volkswagen and GM.
Since mid-June, this intense and prolonged heatwave has been scorching huge parts of China, affecting some 900 million people. On Tuesday, China issued
a red alert heat warning, that's the highest level, to at least 165 cities and counties across the country where temperatures are expected to exceed
40 degrees Celsius or 104 degrees Fahrenheit.
Across China the human toll is serious and the economic toll is rising. Kristie Lu Stout, CNN, Hong Kong
(END VIDEOTAPE)
KOSIK: And these are stories making headlines around the world. Flooding across Pakistan has killed more than 800 people since mid-June according to
the Disaster Management Authority. The relentless rain has also damaged or destroyed hundreds of 1000s of houses as well as dozens of bridges. The
country's Climate Minister warned weather patterns are getting more extreme.
In the U.S., State of Texas torrential rain is causing a once in a century flooding event. The drought parched Dallas area, receiving a summer's worth
of rain in a single day. At least one death has been reported and the danger isn't over yet. Storms are now shifting to the east.
Donald Trump's legal team has asked a judge to let a third party attorney review the documents seized from his Florida home two weeks ago. According
to a legal filing, the attorney would determine if any private documents were confiscated by the FBI. The former president is also asking the judge
to pause the work of federal investigators until the review is completed.
Two years after a deadly explosion in Beirut, part of a cluster of huge wheat silos by the city's port has collapsed. The structure caught fire
over a month ago due to fermenting grains and has been tilting precariously. The silos had been damaged by the explosion in August 2020
when more than 200 people were killed after hundreds of tons of ammonium nitrate ignited.
Coming up on "First Move", in a CNN exclusive a whistleblower says security vulnerabilities at Twitter pose a threat to us security and democracy.
And later, a progress report on a project to find cleaner ways to extract lithium and keep up with our demand for electric cars. Stay with CNN.
(COMMERCIAL BREAK)
[09:15:00]
KOSIK: Now to a CNN exclusive and a potentially explosive whistleblower report that says security vulnerabilities at Twitter pose a threat to
national security and democracy. That disclosure obtained by CNN and the Washington Post comes from Twitter's former Head of Security, Peiter
Zatko's claims were sent last month to Congress and several federal agencies.
In a 200-page disclosure Zatko portrays a chaotic, reckless environment at a mismanaged company that allows too many staffers access to central
controls and sensitive information without adequate oversight. It's not just about a story about - it's not just a story about recklessness,
though, Zatko also alleges that some of the company's senior most executives tried to cover up Twitter's vulnerabilities.
Donie O'Sullivan is here with us. Donie, good to see you. What more can you tell us?
DONIE O'SULLIVAN, CNN CORRESPONDENT: Yes, Alison, these allegations are extremely serious. And they are now in the hands of multiple U.S. law
enforcement agencies. And today, for the first time that whistleblower is speaking out to CNN.
(BEGIN VIDEOTAPE)
O'SULLIVAN (on camera): Ready?
PEITER "MUDGE ZATKO, TWITTER WHISTLEBLOWER: Yes.
O'SULLIVAN (on camera): Why are you coming forward?
ZATKO: All my life I've been about finding places where I can go and make a difference.
O'SULLIVAN (voice-over): This is Peiter Zatko, until January of this year, he was Head of Security at Twitter. But now he's a whistleblower. And he
says Twitter's security problems are so grave they are risks to national security and democracy.
ZATKO: I think Twitter is a critical resource to the entire world. I think it's an extremely important platform.
O'SULLIVAN (voice-over): He's handed over information about the company to U.S. law enforcement agencies, including the SEC, FTC and the Department of
Justice.
UNIDENTIFIED MALE: I am I ask you name in the middle?
ZATKO: I'm Mudge.
O'SULLIVAN (voice-over): Zatko is better known in the hacking world by his nickname, Mudge. He's been a renowned cybersecurity expert for decades.
UNIDENTIFIED MALE: His roots are in hacking, figuring out how computers and software work.
O'SULLIVAN (voice-over): That expertise might be why Jack Dorsey, then CEO of Twitter, hired Zatko after the company was hit by a massive attack in
2020 when hackers took over the accounts of some of the world's most famous people.
JOHN TYE, FOUNDER WHISTLEBLOWER AID: Mudge is one of the top five or six executives at the company.
O'SULLIVAN (voice-over): Zatko is represented by John Tye who founded Whistleblower Aid, the same group that represented Facebook whistleblower
Frances Haugen.
TYE: We are in touch with the law enforcement agencies. They're taking this seriously.
O'SULLIVAN (voice-over): Twitter is pushing back, saying Zatko is peddling a narrative about our privacy and data security practices that is riddled
with inconsistencies and inaccuracies and lacks important context.
[09:20:00]
When we spoke to Zatko and his lawyer, they said that the lawful whistleblower disclosure process only allows them to talk about these
issues in general terms. For specific allegations about Twitter, they referred us to Zatko's disclosure.
TYE: I'm not going to go into details, but I will say that much stands by the disclosure and the allegations in there.
O'SULLIVAN (voice-over): CNN and the Washington Post obtained a copy of the disclosure from a senior democratic official on Capitol Hill. In it Zatko
claims nearly half of Twitter's employees have access to some of the platform's main critical controls.
ZATKO: There's an analogy of an airplane so you get on an airplane and every passenger and the attendant crew all have access to the cockpit, to
the controls, that's entirely unnecessary. It might be easy, but there it's too easy to accidentally or intentionally turn an engine off.
UNIDENTIFIED FEMALE: Twitter accounts belonging to a whole lot of famous people former President--
O'SULLIVAN (voice-over): That kind of access contributed to the massive attack in the summer of 2020 when hackers, two of them teenagers, tricked a
couple of Twitter employees into letting them into Twitter systems. That gave them access to accounts, including that of then presidential candidate
Joe Biden.
JIM SCIUTTO, CNN ANCHOR: I don't have to tell you the significance of being able to breach the Twitter accounts with many millions of followers,
including of leading politicians three months from a presidential election- -
O'SULLIVAN (on camera): In the disclosure, you quote from a Wired Magazine article that says, "But if a teenager had access to an administration panel
can bring the company to its knees. Just imagine what Vladimir Putin can do."
TYE: Foreign intelligence agencies have the resources to identify vulnerabilities that could have systemic effects across an entire platform,
across the whole internet.
O'SULLIVAN (voice-over): Twitter told CNN that since the 2020 hack it had improved these access systems and have trained staff to protect themselves
against hacking.
O'SULLIVAN (on camera): If you're running any system, the more people that have access to the main switches, that's a very risky situation.
ZATKO: Yes, absolutely. I'm talking in generalities just large tech companies need to know what the risks are, and then they also need to have
an appetite to go fix it.
O'SULLIVAN (voice-over): Zatko also claims Twitter has been misleading about how many fake accounts and bots are on its platform. That's an issue
that Elon Musk has made central to his attempt to get out of a deal to buy the company.
ELON MUSK, CEO TESLA & SPACEX: I guess right now, I'm sort of debating the number of bots on Twitter.
O'SULLIVAN (on camera): There will be suspicions of the timing of this. Are you guys carrying water for Elon Musk?
TYE: Absolutely not. We've been following the news just like everyone else. But that has nothing to do with his decisions or with the content of what
was sent in to U.S. law enforcement agencies.
O'SULLIVAN (on camera): Mudge hasn't been talking to Musk in the background or anything like that.
TYE: Not at all.
O'SULLIVAN (voice-over): Zatko says he was fired by Twitter in January of this year after he tried to raise the alarm internally. He points the
finger at Twitter CEO Parag Agrawal saying he has worked to hide Twitter security vulnerabilities from the Board.
O'SULLIVAN (on camera): I suspect that Twitter might try to paint it like this, that as Mudge got fired, and he's trying to retaliate against the
company.
TYE: Absolutely not. This is not any kind of personal issue for him. He was eventually fired in January of this year, but he hasn't given up on trying
to do that job.
O'SULLIVAN (voice-over): In response to allegations Twitter told CNN, security and privacy had long been a priority at Twitter. As for Zatko,
they said, "he", "was fired from his senior executive role at Twitter more than six months ago for poor performance and leadership. He now appears to
be opportunistically seeking to inflict harm on Twitter, its customers and its shareholders."
ZATKO: Your whole perception of the world is made from what you're seeing, reading and consuming online. And if you don't have an understanding of
what's real, what's not, yes, I think this is pretty scary.
O'SULLIVAN (on camera): Are you nervous?
ZATKO: Yes. Yes. This wasn't my first choice. That's - yes, I just want to make the world a better place, a safer place. The levers that I have to do
it are through security, information and privacy.
(END VIDEOTAPE)
O'SULLIVAN: So some serious, serious allegations in there. Everything from threats to national security, to Elon Musk and bots, this is - the
ramifications of this disclosure, Alison, will be playing out for quite some time.
KOSIK: Donie, great reporting. I'm curious what Twitter has said about this.
O'SULLIVAN: Yes, Twitter is pushing back hard. Obviously, you saw in the report there they're coming after Zatko saying essentially that he is
mischaracterizing and exaggerating. Just in the last few minutes, just into CNN, the Twitter CEO - CNN obtained an email of the Twitter CEO sent out to
all Twitter staff in the last few minutes, where he is echoing what is in those public statements saying Zatko is mischaracterizing what is was
happening at the company and encourage staff to continue with their work.
[09:25:00]
KOSIK: And what does this mean for Elon Musk?
O'SULLIVAN: Yes, that's going to become a big part of this. I guess we haven't seen a tweet from Elon yet. He might not have woken up yet. But we
did hear from his lawyer this morning - Elon Musk's lawyer, and the lawyer said that they had already actually subpoenaed the whistleblower Peiter
Zatko in the last few days, separate to the disclosure. They want to talk to him because they said that they found it suspicious, interesting, how he
was fired. So I think this this disclosure could potentially help Musk's case against Twitter.
KOSIK: OK, Donie O'Sullivan, thanks so much.
O'SULLIVAN: Thanks.
KOSIK: Still to come, warnings that Russia could intensify its attacks ahead of Ukraine's independence day, I speak with the operator of one of
the largest grain mills in Southern Ukraine about keeping the business running. That's next.
(COMMERCIAL BREAK)
KOSIK: Welcome back to "First Move." I'm Alison Kosik. As we reported earlier in the show, the U.S. State Department is warning Americans still
living in Ukraine to leave immediately fearing an escalation of Russian attacks ahead of the country's independence day on Wednesday.
Wednesday also marks six months since the start of the war and intense shelling is still going on in many parts of the country leaving granaries
like this - that you see here - destroyed. That warehouse was owned by Shamil Malachiyev and his family who operate one of the largest grain mills
in southern Ukraine. He says moving the factory to a safer region with employees is proving to be difficult.
[09:30:00]
Shamil joins me now. Live for us. Great to have you with us. Thanks for taking time out to talk with us. And I'm going to ask you about
independence day in a moment. But first, I know you talked with Julia Chatterley right here on "First Move" in April. I want to hear how you're
doing now, four months later, you know, what's changed for you, what's changed for your business?
SHAMIL MALACHIYEV, UKRAINE GRAIN MILL OPERATOR: Alison, first of all, thank you for inviting me to speak. And last four months have been very busy, our
city has lost its water supply, so we had to drill a lot of wells around the city and around the factory as well.
During this five months since we spoke to Julia, around 75 percent of the city have left to safer regions. Around 80 percent of businesses have
closed due to the fact that they've bombed either or their employees leaving for the safer areas. We continued working, we continued providing
humanitarian aid.
I want to thank so much the Nobel Ukraine Fund from the Silicon Valley that has helped a lot raised $100,000 to give out us humanitarian aid. So at the
moment, our main focus, like for the past four months, it has been to providing the humanitarian aid as well as remaining operational to the
extent that we can, whilst being in the city that that is getting shelled, pretty much every day.
KOSIK: With Ukraine's independence day coming there are going to be no celebrations, and instead Ukrainians on edge about possible elevated
attacks by Russia. I'm curious what your thoughts are as you commemorate the day?
MALACHIYEV: Well, we are going to celebrate anyway, because this is one of the most important days for any Ukrainian. We have received a lot of - kind
of like there's a lot of gossip going on that the shelling is going to be intensified, because we know how Russia likes to elevate (ph) us of our
holidays.
What we're trying to do is to minimize the working hours, and to try to move to a safer areas for two, three days during the holidays to make sure
that none of us become casualties to any like intentional strikes from the Russian side.
KOSIK: Tomorrow is six months into this war, did you think it would last this long?
MALACHIYEV: Well, at the start, we thought it was all going to be over in two or three weeks. But now it seems like this war is going to go on for
another one or two years even. We - that will depend massively on the amount of military support that we receive from our partners from the U.S.
and European Union. With the Lend-Lease that will become operational in October we'll be more in a position to start counter attacking and
regaining our territories from Kherson and Southern regions.
KOSIK: With the realization that this war could go on, as you said, for another one to two years, how are your employees handling the strain of all
this? You are continuing to do business?
MALACHIYEV: Yes, we are. And we had around 50 percent of our employees left the city to safer region. We had to find new ones who have remained in the
city for like a number of reasons. And at the moment, we see that operating like this for another two years is probably going to be impossible for us
to do.
And we are now looking for decent places to relocate our factory and provide shelter, like provide housing to our employees as well, so they can
move all together with the company. So we're looking for opportunities or grants, funds that will help us do so.
KOSIK: I'm curious what percentage of the food that you produce at the moment that you're continuing to give to the humanitarian effort versus the
percentage that you're selling. And I know that you have fundraising efforts going on as well.
MALACHIYEV: We give out around 25 percent of all our products as humanitarian aid, with remaining 75 goes to other factories operational
still on the western side of Ukraine, so they could continue producing pasta and biscuits or cookies. Yes, so we've also raised the fundraising
campaign and we've raised around $18,000 by now from our friends from usual people, normal people in the U.S. and the European Union.
KOSIK: And The U.S. has been sending humanitarian aid in the form of food to the Ukraine. You say that's counterproductive because the U.S. is
actually killing the remaining factories in Ukraine? Talk us through this.
MALACHIYEV: That is indeed so. So first of all, for example, if we take one of our parts of our factories, the pasta manufacturing plant, if the U.S.
decides to send, like a lot of containers with pasta to Ukraine, basically, it overfloods the market. So any operational factories inside the Ukraine,
they have nowhere to sell the produce to.
[09:35:00]
And if American funds could instead buy this same produce that can be bought in Ukraine and produced in Ukraine, they would not only be providing
the employment for the people like - they would not only allow factories to remain operational, but they would also save a lot of costs on the
logistics side, plus, they would be getting produce at a lot lower prices.
So overall, they would probably have around two times the amount of volume of humanitarian aid provided, plus stimulating the economy, plus helping
people retain employment and factories remain operational. But that only touches those kinds of products that can be produced within Ukraine.
KOSIK: How are you doing? Are you going back and forth to the factory and back where you are now? I mean, you're trying to keep this thing afloat,
aren't you?
MALACHIYEV: Yes, it's a lot of moving around. Part of my family lives in the Western city of Pustomyty (ph) where we've - they've moved around five
months ago, I think. Right now we're driving a lot between Odesa and Ukraine - or just Odessa and Mikulov, because at the moment it's kind of
dangerous to sleep in Mikulov during the nights. We tried to leave for the night and then come back in the mornings. And trying not to get our
employees come to the factory without need.
So we only choose the days for everyone that they come to the factory and they continue working to ensure it's as safe as possible because, well, you
know, we've seen what happened to our warehouse. And we are quite worried that something like this might happen to like some other parts of the
factory within the next half a year or a year.
KOSIK: Well, you know, you're doing incredible work. Your employees are doing that as well. I hope that you and your employees stay safe. Shamil
Malachiyev of thanks so much for coming on the show today.
MALACHIYEV: You're very much, Alison. Thank you, United States.
KOSIK: Coming up, crypto at the crossroads, but Bitcoin down more than 50 percent this year-to-date and trading near one and a half year lows. Will
the crypto winter extend beyond summer? All of that and more, coming up.
(COMMERCIAL BREAK)
[09:40:00]
KOSIK: Welcome back to "First Move." I'm Alison Kosik. U.S. stocks are up and running this Tuesday. The major averages little changed in the early
going. The bulls unable to turn it around after Monday's sharp pullback, the worst day on Wall Street since June. Trading could remain choppy ahead
of important new reads later this week on U.S. GDP and inflation, not to mention Fed Chair Jerome Powell's big monetary policy speech that's coming
on Friday.
Macy's is in early session gainer. The company beating expectations on the top and bottom lines, but it's also lowering forward guidance, warning the
consumer will continue to pull back on spending.
Twitter, meantime is sharply lower as traders react to an explosive whistleblower report calling the social media firm a threat to national
security and democracy.
Other companies in the news today include Ford laying off 3,000 white collar workers as part of its transition to electric vehicles. And British
Airways saying it's canceling some 10,000 flights from its fall and winter schedules due to staff shortages.
Volatility and global markets hitting speculative assets like Bitcoin. The cryptocurrency little changed in trading today though, but it is down some
5 percent in the past month even as the broader market has gained.
Joining me now Juthica Chou. She's the head of OTC options trading at the crypto exchange, Kraken. Thanks for being here.
JUTHICA CHOU, HEAD OF OTC OPTIONS TRADING, KRAKEN: Thanks for having me.
KOSIK: Let's go ahead and start with Ethereum with The Merge, that's all systems go for this, it's of securing the Ethereum blockchain, using a
method called proof-of-work to a new method called proof-of-stake, that's being done in the name of saving energy. So I guess translate all this for
those who don't follow all the nuts and bolts of crypto. Translate what's going on here? And for those who trade Ether, what does this overall mean?
CHOU: Yes, so this is a network upgrade onto the Ethereum protocol. It's been in the works for maybe five years for moving from the way that
transactions are authenticated from a very energy intensive mining process to more of a staking process where the larger holders authenticate and
validate transaction. So it is reducing energy. It is something that's been discussed for a while.
And I think in general, with crypto, you don't get a lot of catalysts that come through protocol upgrades, because it's not designed to change
extremely rapidly. And so this has been one that's really garnered a lot of attention and a lot of momentum for Ethereum in the crypto space,
KOSIK: Will Investors notice the change?
CHOU: I mean, I think over time, part of the thesis that we saw with people who were trading on Ethereum got up to 2,000, was that Investors who were
more ESG focused perhaps, might now want to allocate more funds towards Ethereum which would then catalyze into something that Investors would
notice. So I think that was part of the thesis, at least in that initial run up, that we were seeing earlier in the month.
KOSIK: So is this paving the way for government regulation over Ether, something that those who invest in it, who believe in Ethereum don't want?
CHOU: I think in general, government regulation is coming. I think there's some arguments that if there are more centralized areas of cryptocurrencies
and the government will try to regulate those central areas.
And so in order to be most defensible or defensive against government regulation, whether it's at the protocol level, or in general, at the
company level, the more decentralized something is, the more resilient it is. And so I think there are arguments that some of the centralization
aspects might perhaps make it easier for governments to regulate.
At the end of the day, though, governments will go after centralized entities to regulate. They'll go after any centralized aspects. And so
decentralization is definitely core to cryptocurrencies use cases and value added at least.
KOSIK: OK, let's talk about Bitcoin. You know, even if Bitcoin is finished with its mighty fall, a huge rally that may not be in the cards either. We
are seeing Bitcoin stuck in this narrow range, is it going to be stuck there for a while? And what has to happen for the next move higher for
Bitcoin?
CHOU: So I think in general, we kind of talked about different catalysts. Right now, Bitcoin is moving a little bit with the broader market, with the
NASDAQ in particular. And so, investors in cryptocurrency are still looking at macro catalysts, looking for some of the data coming out later this week
with GDP and inflation as well as Jackson Hole and comments from Powell on Friday, and then some of the idiosyncratic factors.
So investors are actually started to dip their toes and reallocate. And I think once some of the leverage issues from June played out, and we have a
little bit of stabilization here and a little bit of a lower volatile environment, we are seeing Investors start to get interested in either
reallocating, or putting in more of their portfolio. And so I think some of those things together will help catalyze Bitcoin out of this kind of range
bound price action that we've been seeing.
[09:45:00]
KOSIK: Are you referring to institutional Investors or retail or both as far as coming back?
CHOU: Right now, I think it's more institutional Investors. I think institutions have been on the sidelines following the space. They're
looking more for entry points. Retail was perhaps a little bit more hurt in some of the sell off. And so we'll probably see some of the larger gains
from institutions.
KOSIK: There have been a lot of negative headlines recently that have hurt the industry. There was the Luna, Terra, crash, the high profile crypto
hacks, what would help restore the crypto industry's credibility?
CHOU: Well, you know, I think in general, the crypto industry needs to show its ability to self-regulate and we are seeing that. You know, we had the
Luna hacks, we had the three arrows play out, we had this leverage windfall. And at the end of the day, the industry absorbed a lot of this on
its own. There were no bailouts.
I mean, I think the good - best practices need to evolve from this so that it can kind of build up the stability and trust that we need in the space.
KOSIK: Do you think that crypto exchanges will be the next sector to see? The kind of pain that has cut down lenders and hedge funds?
CHOU: Well, I think exchanges have not really engaged in that kind of credit environment that you saw with some of the lenders where they were
giving unsecured loans. Exchanges often take up collateral ahead of time. They're just kind of different businesses in that regard. And so I think
the exchanges have proved to be quite stable in this sell off.
Obviously, higher volatile environments usually lead to higher volumes, at least in the short term. And so I think we've seen that exchanges have been
a little bit more resilient than some of the lenders out there.
KOSIK: All right. Thank you, Juthica Chou, the Head of OTC options trading at Kraken, thanks for your expertise today.
CHOU: Thank you so much.
KOSIK: Coming up, what could be an answer to surging demand for EV batteries while protecting the environment? Lilac Solutions says it's
solved both problems. That's next.
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KOSIK: Lithium is a core ingredient of rechargeable batteries and surging demand for electric vehicles has caused a shortage of this valuable
mineral. It's seen as a key to the clean energy transition, and producers are looking for new ways to process lithium, while reducing its
environmental footprint.
A company called Lilac Solutions says it's unlocked a new way of extracting lithium from brine, natural water deposits containing high levels of salt.
Normally, this needs huge evaporation ponds, which are vulnerable to weather and have been criticized for their environmental impact.
[09:50:00]
Lilac's approach which avoids using these ponds is called ion exchange technology. Now it's moving from the lab to the field, and a pilot project
in partnership with Lake Resources in Argentina. The company was also chosen for a pilot scheme by the Bolivian government. I want to bring in
Dave Snydacker, he is the CEO of Lilacs Solutions. Thanks for your time today.
DAVE SNYDACKER, CEO LILAC SOLUTIONS: Thanks for having me.
KOSIK: So talk us through how your technology works to extract lithium.
SNYDACKER: So Lilac is a technology company focused on lithium production. And we've patented a new technology to produce lithium from brine
resources. We do this using ion exchange. Ion exchange is a very common technology in water treatment and metals processing.
And every ion exchange process is based on a small bead, which is selective for certain metals. But there's never been an ion exchange bead before for
lithium, which is commercially viable. So Lilac has developed for the first time a new ion exchange technology that works for lithium. It's based on a
small bead, and we flow the brine through the beads. The beads absorb the lithium, and then we flush the lithium out.
KOSIK: How does that avoid hurting the environment?
SNYDACKER: Today, lithium is produced with two different methods, either with evaporation ponds, or with aluminum absorbents. Now the ponds use a
huge amount of land, up to 10,000 acres, and the absorbents they use very large amounts of water. So the industry really needs something that use
much less land and much less water. We've developed a technology that provides that.
KOSIK: Your technology is being used in a variety of projects, including a salt lake lithium mine in Argentina, it's called Kachi. Why is this project
a crucial test for direct lithium extraction, which critics say works well in the laboratory, but when you get it out into the field, it runs into
trouble?
SNYDACKER: Kachi is a great project and great application of our technology. It's a very large lithium resource in Argentina, but the
lithium grade is substantially lower than other projects that are in production today.
So ion exchange technology from Lilac is the key enabler here which unlocks production. And we've completed more than 20,000 hours of continuous
operation with the Kachi brine, showing that the technology works. And we're currently installing a plant on site at pilot scale to produce larger
quantities of lithium.
KOSIK: You know, there's just a lot of skepticism surrounding your technology. So how much are these projects that you're involved in kind of
tests for your technology? I mean, you know, there are critics all over the place about it.
Short seller J Capital Research alleges that lake resources plan, for instance, is based on a process from your company that likely they say
doesn't work, and that is too costly to run, and uses too much fresh water. What do you say to that?
SNYDACKER: We've tested more brines and completed more hours of test work than anybody else in the industry. We've tested more than 60 brines from
all over the world, and completed 10s of 1000s of hours of operation at bench scale, in a pilot scale out in the field. Last year, we completed our
first pilot on site in the field. And so this will be our second pilot plant. We're now highly confident that this will be successful.
My background is in the battery industry, developing new battery technologies. And there's a direct analogy between what's been happening
with battery technology and what's been happening with lithium extraction.
A lot of new announcements get made that a new technology has been developed, and it may work for a few days or for a week, few weeks, but
then it breaks down and the components need to be replaced. It's much the same in the lithium extraction industry where a number of players have made
very bold announcements based on performance of technology. But their performance doesn't hold up over time.
The critical advantage of the Lilac technology is, not only can we get good performance, high lithium recoveries, high selectivities, but we can
maintain that performance over time and do it at low cost. And we've proven that with test work based on real brines.
KOSIK: I want to get your opinion very quickly on this. There's this chicken and egg scenario happening here. Lawmakers from Jaguar to Cadillac
are going electric by 2025 2030, that's just two automakers. How will the world actually produce enough lithium because the cars are being built?
SNYDACKER: EVs are clearly the future and the car companies have partnered with big battery manufacturers out of Korea and Japan to build huge battery
factories here in the U.S. These factories use a variety of different metals, but lithium is the essential metal which is growing from the
smallest baseline. So lithium has become a critical bottleneck in the production of electric cars and for meeting climate goals. New technology
is essential to producing this lithium and to unlocking the EV manufacturing.
[09:55:00]
KOSIK: All right, Dave Snydacker, CEO of Lilac Solutions, thanks so much for coming on the show.
SNYDACKER: Thank you.
KOSIK: And finally on "First Move", have the minions fallen victim to Chinese censorship? Moviegoers wanting to see "Minions: The Rise of Gru"
have gone on social media complaining that the ending was changed.
The original version sees the supervillain Gru riding off with another villain, Wild Knuckles, after a heist. But in China, audiences say Gru
returns to his family and tells his accomplishments as a father to his three girls. Universal Pictures has not commented so far.
That's it for the show. I'm Alison Kosik. Follow me on the gram and on Twitter @alisonkosik. Thanks for joining us. "Connect the World with Becky
Anderson" is next. I'll see you tomorrow.
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