Return to Transcripts main page
Quest Means Business
US Attorney General Appoints Special Counsel For Trump Investigations; Qatar Bans Sale Of Alcohol At World Cup Stadiums; Employee Exodus Deals Another Blow To Twitter; U.S. Grants MBS Legal Immunity Over Khashoggi Lawsuit; Swedish Prosecutors: Nord Stream Blast Was Act Of Sabotage; Taylor Swift Calls Ticketmaster Fiasco "Excruciating For Me". Aired 3-4p ET
Aired November 18, 2022 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RAHEL SOLOMON, CNN BUSINESS HOST: A lackluster day on Wall Street, taking a look at the Dow you can see the Dow is off -- actually up, fractionally
about a quarter of a point. Those are the markets and these are the main events.
US Attorney General appoints a Special Counsel to oversee investigations linked to former President Donald Trump.
A last minute ban on beer sales puts World Cup sponsor, Budweiser, in an awkward position.
After a mass employee exodus, Elon Musk calling on Twitter's remaining engineers.
Live from New York, it is Friday, November 18th. I'm Rahel Solomon in for Richard Quest and I too, mean business.
The US Attorney General is appointing a Special Counsel to oversee two investigations related to former President Donald Trump. Jack Smith, a
former chief prosecutor for the Special Court at The Hague will be looking into the storage of National Defense Information at Trump's Mar-a-Lago
home, also key aspects of the January 6 insurrection.
A spokesperson for Mr. Trump has already called the move a political stunt. Attorney General Merrick Garland said that having a Special Counsel shields
the investigations from politics.
(BEGIN VIDEO CLIP)
MERRICK GARLAND, US ATTORNEY GENERAL: Based on recent developments, including the former President's announcement that he is a candidate for
President in the next election, and the sitting President stated intention to be a candidate as well, I have concluded that it is in the public
interest to appoint a Special Counsel.
Such an appointment underscores the Department's commitment to both independence and accountability in particularly sensitive matters.
(END VIDEO CLIP)
SOLOMON: Renato Mariotti is a former Federal prosecutor. Renato, thanks for being with us today. So, walk us through a bit more about why appointing a
Special Counsel. Walk us through some of the political considerations at play here.
RENATO MARIOTTI, FORMER FEDERAL PROSECUTOR: Sure, so a Special Counsel is appointed in one of two circumstances where there is a conflict of interest
or whether there's extraordinary circumstances.
Obviously, I think the investigation of the immediate prior President of the United States is a pretty extraordinary circumstance. I think that's
why Merrick Garland made that appointment here. And he did so because having a Special Counsel in place means that someone who is not directly
appointed by President Biden would be making that decision.
So essentially, the Special Counsel is basically a prosecutor who is setting up an ad hoc office within the Justice Department that has some
measure of independence, ultimately, though, is responsible to the Attorney General. The Attorney General can overturn the Special Counsel's decisions.
But if he does, so, then he needs to make a report to Congress, which offers some transparency.
SOLOMON: I see. So, when you say some measure of independence, does that also imply that this person, it would be harder to fire this person?
MARIOTTI: Well, first of all, it is a starting point that the person would actually have to be fired, right? In other words, there is somebody other
than an appointee of the President, who is making an important call and is heading up the investigation him or herself, in this case himself.
So you know, in other words, let's just say a Special Counsel wasn't appointed. Merrick Garland was appointed by President Biden, whatever
decision he made on his own would be considered by some, argue that he was doing that because he was beholden to President Biden or he was a Democrat
or something along those lines.
The people who are underneath who are reporting directly to Attorney General Garland also were appointed by President Biden. So this sort of
takes us out of the realm of Biden appointees, it means that somebody who essentially is a career prosecutor who is appointed by Attorney General
garland, precisely because he is viewed as nonpolitical, viewed as a career prosecutor will make that that first top line decision and unless Mr.
Garland wants to overrule the Special Counsel, ultimately that that person will be making the call.
SOLOMON: And Renato, we learned within the last 30 minutes during this announcement that the Special Counsel as I pointed out is Jack Smith. What
more do we know about him?
MARIOTTI: Well, he is actually somebody who has had a very long career as a prosecutor, you know, there are a lot of folks who are prosecutors for a
small portion of their career and then they spend a lot of time in private practice.
Mr. Smith has been a former State prosecutor, former Federal prosecutor, he was an Assistant US Attorney. He was, you know, in New York there, but then
he ended up becoming the United States Attorney in Tennessee. You know, I think something that shows the Justice Department trusted him enough to
have him handle in an area where they needed some help.
He ultimately is, you know, I think believe currently serving as an international prosecutor in The Hague. So, just somebody who has a wide
range of experience, not really well known to the public or perceived as political, which is I think, also something that Attorney General Garland
was likely looking for.
SOLOMON: What do we know about which of these cases could be more concerning to the former President? Is it the Mar-a-Lago case? Is it the
January 6 case? I mean, what do we know about what might be more concerning to his team?
MARIOTTI: If I was representing the former President, I would be very concerned about the Mar-a-Lago case. That is very straightforward. You
know, if you or I had top secret documents in our basement, we will be in real trouble. We would have to be very concerned about being indicted, we
likely would be indicted. I think that case is very straightforward.
It's just -- it is difficult given that the Justice Department asked for the documents back and served a grand jury subpoena, made a visit to Mar-a-
Lago asking for the documents back. I think it's hard to defend that case.
I think January 6th is much more difficult to prosecute, and I wouldn't be surprised if Mr. Smith ultimately decides to bring a prosecution in the
Mar-a-Lago charges without bringing a prosecution to January 6th or delaying decision on that until after the Mar-a-Lago prosecution plays
SOLOMON: Renato Mariotti, I appreciate the insight.
Renato Mariotti is a former Federal prosecutor.
Just two days before the World Cup, Qatar has made a last minute backflip. The nation is banning beer at World Cup matches. Beer are often closely
associated with enjoying the sport. Budweiser had the deal to exclusively sell beer at the eight stadiums tweeting and then deleting, "Well, this is
Qatar is the first Muslim country to host the FIFA World Cup. It does tightly restrict the sale and consumption of alcohol.
Amanda Davies is live in Doha.
Amanda, good to have you.
So, there have been strong reactions to this news. I mean, I imagine for the million fans that are about to land or who have already landed, this
feels a bit like you've been blindsided.
AMANDA DAVIES, CNN WORLD SPORT ANCHOR: Yes, there's an estimated 1.2 million fans expected to attend the World Cup here in Qatar over the next
Let's be clear, though, not everybody around the world drinks alcohol or believes people should be drinking alcohol, but it is the timing and the
manner of this announcement that I think has caused so many eyebrows to be raised. It's really quite embarrassing for world football's governing body,
FIFA, and one of their biggest most high profile sponsors in Budweiser, who have had such a longstanding relationship with this tournament.
Usually, when you get inside the stadiums at a World Cup, that is FIFA territory, they set the rules. But what we have here is a World Cup, which
very much since the word go has been challenging those rules.
It was of course, decided in that unprecedented double bidding process alongside 2018, there was then the fact it has been moved from a summer to
a winter World Cup, the first ever World Cup in the Middle East, the first ever World Cup in a Muslim country.
And Qatar's view has always been very clear. We welcome everybody from all around the world, but please respect our rules and our cultures.
But the timing means, as you rightly say, so many of the teams that are already here, the international media is already here. The fans are here.
And despite -- you know, this is very different as a story to all the concerns about human rights issues, the treatment of migrant workers, the
pressures, the difficulties of members of the LGBTQ+ community who live here.
But what this does is raises more doubts, more questions in people's minds as to what is going to happen over the next five weeks. And even beyond
that, in terms of the guarantees, the promises that have been given to people about what they should be expecting.
SOLOMON: And Amanda, I think you make a great point just about the timing of how this all played out. What do you think is behind the last minute
nature of this U-turn? I mean, you could argue they had 12 years to prepare.
DAVIES: Yes, the longest most controversial builds up to any World Cup in history. But I think if I take a step back, I've covered this story and
this World Cup since that now infamous day in 2010 that was surrounded by so much controversy, so many people just asking how and why Qatar was
awarded this tournament.
And really since that day, people here have felt they've been fighting a losing battle. They feel they've tried to answer questions, they feel
they've tried to open their arms and invite people to come and see, yes, still they are not being given the benefit of the doubt, the rub of the
green in terms of things like human rights issues.
Yes, there is still a very long way to go. Progress has been made, but there is a long way to go. And I have noticed a real hardening over the
last 18 months, two years of coming here, Nasser Al Khater, the CEO said to me, "We have been treated unfairly." Racism is a word that has been used by
organizers here as to how they have been treated and they've got to the point now, the draw has taken place. Now, the teams are on the ground.
They said you know what, we are going to host this World Cup. We are going to put on a show and we are going to do it in our terms. And we had perhaps
one of the big indicators of that was their moving the date of the first match of this tournament from Monday the 21st to Sunday, the 20th. So they
could get their big moment, their first ever match at a World Cup finals on their own, on Sunday playing against Ecuador.
And this, you would have to say is another sign of that and you're seeing very much who has the power in this sort of -- now we're heading into the
SOLOMON: You absolutely are. Amanda Davies, good to have you in Qatar there.
And this U-turn really complicates FIFA's deal with Budweiser reportedly worth $75 million. Budweiser launched its biggest ever campaign around the
event with activities in 70 markets and at 1.2 million bars, restaurants and retail outlets.
The company behind the beer, Belgium-based AB InBev has previously said that it makes more profit from fans watching on television than consumption
at the event.
Ricardo Fort is the founder of Sport by Fort Consulting and is a former Vice President of Global Sports and Entertainment Partnerships at Coca-Cola
and he joins me now from Atlanta.
Ricardo, good to have you. So, what do you think of this last minute U- turn? I mean, how unusual is it to see something like this just days before a major event?
RICARDO FORT, FOUNDER, SPORT BY FORT CONSULTING: This is incredible and it is unprecedented. All the decisions that the organizing committee in Qatar
took in the last few weeks, including the one today are totally their right to make these calls, but making this call so close to kickoff really
creates a lot of problems and complications for the teams that are on the ground executing events and their marketing. So, that's a really unique
SOLOMON: Do you think Budweiser still gets a bump though? As we pointed out, AB InBev said, you know, they make more profit off of all of the
advertising rather than consumption on the field or on site? I mean, do you think Budweiser is still getting a bump from this? It's still a net
positive for the company?
FORT: I have no doubt. The vast majority of the results that any sponsor of the FIFA World Cup accrue is coming from everywhere else, but the host
country. Big or small, it doesn't matter the size of the country, the operations and the consumption of their products in the host country is
marginal to the overall impact of the business.
So as long as AB InBev and Budweiser are promoting their brands all over the world, they will get a very healthy return on their investments of this
SOLOMON: That said, I mean, this is probably not the way they expected the sponsorship to go down. I mean, do you think having been in your previous
position that Budweiser is on the phone with people and trying to either get some money back or really quite upset about how this is all going down?
FORT: Well, I'm sure they are very upset and they have all the rights to be upset because they worked a lot and they spent a lot of money to execute
everything in Qatar. Just to give you an idea, Qatar is a very small market for most of the companies even more for a company like AB because they
don't have business in the country, barely have business in the country.
So to execute the workup, they have to bring trucks from other countries, refrigerators from other countries, staff from other countries. This is a
very expensive logistical operation they have been doing for the last several months.
So to come up now, two days before opening, they have to stop everything, remove all the things that they have put in place for the party they were
planning to be a part of, it must be really frustrating.
Having said that, they should be on the phone with the organizing committee in Qatar that is the one that took the decision because I'm pretty sure
that FIFA accepted that decision, but they were not the decision makers.
SOLOMON: And as I said you had previously been with Coca-Cola.
You know, I'm really curious. Walk me through the conversations that a major company like Coca-Cola or Budweiser is having when deciding whether
to partner with a major sports organization? I naturally think of the Olympics in Beijing. I mean, you make this agreement to partner with a
sports event, not fully knowing what the controversy or what the blowback of that might be.
FORT: Yes. When you sign a contract, you have no idea where the events are going to happen. So, usually contracts of the likes of Coca-Cola or Visa or
AB, they are all signed way before the host countries are assigned. So in the long duration of a contract like that, you get all sorts of hosts.
So if you look back in the last ten to twelve years, you have had good markets, large markets like Brazil, or during the 2018 World Cup and
Russia, and then you get smaller markets that from a business standpoint are not great for the sponsors.
But luckily they will all be around for the next one because when the FIFA World Cup comes to North America in 2026, it is going to be an incredible
event for all the partners and all the companies that can be involved with it.
SOLOMON: What's the takeaway, do you think for executives and business owners watching this? You know, I thought about the Peloton example, I
don't know if you remember, but the Peloton example on the "Sex & the City" episode, and that ended up being quite a disaster just in terms of how the
brand was used.
And so what's the takeaway in terms of determining who you partner with and how much risk your company is willing to absorb?
FORT: Well, when you're a partner with sports and entertainment, there is always a risk. So, as long as you have good contracts in place, that you
have good crisis management teams in place and have processes that can deal with the unexpected things that will inevitably happen, you should be fine.
Most companies get a lot of positive returns from their sponsorship investments, and some of these bumps in the road that we are seeing today
with AB in Qatar, they are natural to the industry of sponsorship.
So, if you are well prepared, you can sail through it without major troubles.
SOLOMON: Okay, so you should be fine, but have a good crisis management team employed, that seems to be the takeaway.
FORT: Just in case.
SOLOMON: Just in case. Ricardo Fort, thanks for being with us today, the founder of Sport by Fort consulting and former Vice President of Global
Sports and Entertainment Partnerships at Coca-Cola.
And coming up next, a company in crisis. Staff leaving en masse, the social media platform teetering towards collapse and a billionaire CEO struggling
to regain control. We have all the latest on what is going on at Twitter coming up next.
SOLOMON: Welcome back.
Twitter employees say that that hardcore work mandate from Elon Musk is for the birds and users are scared for the platform's survival.
Elon Musk called an emergency meeting for software engineers today. It comes after hundreds of employees left the company prompting Twitter to
temporarily close their doors and shut down their offices.
Meanwhile, users are voicing their concern. The #RIPTwitter was trending last night. Many say that they are concerned that the social media site
will no longer work as many employees leave. Some users even joked about pitching in to help.
The worker exodus caps a turbulent three weeks for Twitter. So, since Elon Musk took over, the company has seen mass layoffs, advertisers pull out, a
new premium offering implemented then halted just to name a few.
As Twitter has dealt blow after blow, there is concern about whether it can carry on.
Clare Duffy is with me now in New York.
Clare, good to have you. So there are lots of questions after those mass layoffs a few weeks ago and then this would also appear to be a mass exodus
of workers. Who is left? I mean, what do we know about who is running Twitter other than Elon Musk?
CLARE DUFFY, CNN BUSINESS WRITER: It is the big question, Rahel. I mean, Elon Musk is clearly running the show here, but who he has got behind him,
who he has got working with him, it is really unclear after we saw these hundreds of employees yesterday opt out of his offer to work extremely hard
You know, it just seems like the situation there is chaos. Once again today, he called this emergency meeting of software engineers. He suggested
that remote employees should fly to San Francisco if they can to make the meeting in person. This comes after he had said the offices were going to
be closed until Monday. So, there was a reversal there at some point.
Then you have him tweeting that he has made decisions about Twitter's content moderation policies. And you know, inside the company, we heard
from one employee who said, this is a quote, "It's a morgue. Yes, we are still doing what we can today, although the pace is slow."
And so you know, it's just not clear exactly who is working with Elon Musk, but more importantly, what his strategy is right now.
SOLOMON: A lot of questions, but he is also weighing in on Twitter, as would be expected, but also saying that certain people might be reinstated.
What are we learning about what he is saying on Twitter?
DUFFY: Exactly. Just a little bit ago, Musk weighed in and said he plans to restore the comedian, Kathy Griffin, as well as a couple of other sort
of controversial Twitter users, Jordan Peterson; the satire site, Babylon Bee to the site. The accounts were previously banned.
However, he says that the company has not yet made the decision about whether to restore the account of President Donald Trump -- former
President Donald Trump, despite the fact that he says he plans to run again for the White House in 2024, and this came as sort of an effort for Musk to
try to clarify the company's content moderation policies.
He said in a separate tweet, "New Twitter policy is freedom of speech, but not freedom of reach. Negative/hate tweets will be max deboosted and
demonetized, so no ads or other revenue to Twitter."
You know, it seems important to mention that that's not such a different policy than a lot of other social media platforms have that Twitter has had
previously, but I think the big question here is, how is he going to handle users who repeatedly violate the company's rules?
SOLOMON: I mean, if the app still exists, which Clare, I mean, what is the future at this point of Twitter looking like? I mean, as you have alluded
to, I mean, some are questioning its survival.
Now, there are, of course, other social media apps, but Twitter does have a bit of an advantage when it comes to news gathering, hot takes, hot
opinions. I mean, what are we learning about what the future of Twitter might look like? Are there any other social media apps that are positioning
for more market share?
DUFFY: Right, there are a number of other platforms that users have talked about sort of decamping to, but as you say, there are just not that
many great alternatives that have the same sort of reach and audience that Twitter does. Twitter remains the place that journalists and public figures
go to, to make statements and gather news.
You know, the President of the United States goes to Twitter to make official statements. And so, it's really important, despite all the chaos
that Elon Musk has caused in the past couple of weeks, and there are really significant concerns and questions about whether these employees that have
exited, some of whom had seriously important roles in terms of keeping the platform on line, maintaining the infrastructure that underlies this
And you know, you're talking about the World Cup coming up this weekend. That's often one of the biggest events in terms of traffic on Twitter, and
it could be a real strain on the platform as it has lost all of these employees who are responsible for keeping it online.
SOLOMON: Well, Clare, I know it's all kept you very busy. Here is hoping that you get a bit of rest this weekend.
DUFFY: Thank you, Rahel.
SOLOMON: Clare Duffy, good to have you.
The crypto exchange, Binance kicked in half a billion dollars to help Elon Musk take over Twitter. Binance CEO, Changpeng Zhao sat down with CNN's
Anna Stewart. Hear what he had to say about Elon Musk as CEO of Twitter.
(BEGIN VIDEO CLIP)
CHANGPENG ZHAO, CEO, BINANCE: I'm more confident in Twitter than ever with Elon Musk taking over, so I think -- I support all the things he did. I
support all the decisions he did. Twitter is not going down, I can tell you why.
Twitter has never been more profitable in its entire existence than in the last two weeks under Elon.
(END VIDEO CLIP)
SOLOMON: Okay, well, that's a hot take. We'll have much more of Anna's interview with the Binance CEO later in the show, including his take on the
collapse of FTX.
Meanwhile, Grindr shares are soaring after going public via SPAC this morning. The LGBT-focused social network and dating app made its debut on
the New York Stock Exchange. The site which has been around since 2009 boasts millions of users. The stock opened at $17.90 a share rising
however, as much as 300 percent, yes, three, zero, zero percent today, losing a little steam toward the end of the day now trading a bit closer to
$40.00 a share.
I spoke to CEO George Arison, after Grindr's debut this morning, he told me how he is planning to bring in more income. Listen.
(BEGIN VIDEO CLIP)
GEORGE ARISON, CEO, GRINDR: You can't time the market. You should do what's right for the business. And then everything else will take care of itself.
As long as we focus on growing our revenue, which we've been doing really well and will continue to do, maintaining a very, very strong EBITDA
margin, which Grindr has had and satisfying our users with an amazing product, the market and the price of the shares and all of that will take
care of itself.
SOLOMON: Some of your competitors have been pretty hammered this year. I mean, Match I think is off about 63 percent. Bumble shares are off about 28
percent. I mean, what's Grindr's growth strategy? I mean, give me some specifics in terms of how Grindr expects to buck the trend in tech right
ARISON: Look, Grindr is very unique in ways, I think. Number one, we're actually growing and are making money at the same time. Most tech companies
and I have been tech entrepreneur for years, have a hard time doing that. And number two is, we are very early in monetization.
So even though Grindr has been around since 2009, it hasn't really thought about making money for that long.
SOLOMON: I saw that Grindr has 11 million active users, but only has 765,000 paying users. I mean, how do you narrow that gap?
ARISON: One of the experiments we need to run for example, which is something we've only recently started thinking about is maybe offering a
cheaper tier in our subscriptions, right?
SOLOMON: Similar to what Netflix did.
ARISON: Yes. So, I started a little bit high there, kind of higher end compared to what some of the other companies. So I think experimenting with
a cheaper tier is something we need to do. But on the flip side, we also know that we have power users who use us a lot for a lot of different
things. Maybe for those users, we can actually have additional features where we offer a VIP kind of subscription that's even higher, right?
So, there is a tiering that we need to think about, and then there is also kind of add on features, right, like ala carte features that we need to
offer as well.
SOLOMON: Grindr has not certainly been without its challenges, and its controversies. Most notably, I think the cybersecurity issues, the privacy
issues. I mean, there have been some really awful stories of people being outed without their consent. I mean, what is Grindr doing to address that?
ARISON: Yes. So all of that happened under previous leadership that, you know, hasn't been around for a very long time. In 2020, the US government,
CFIUS ordered a sale of Grindr from Chinese ownership to American ownership, which, you know, was, I think, a very right move for our users
and our product.
And the new team, that is, you know, owning Grindr now, and the management that was in place for the last couple of years, as well as management, and
you know, I'm inheriting now, we are obviously super focused on privacy, it's really important.
We can't be successful at being this awesome product for our users and our customers without having privacy and without having safety. So, that's very
much top of mind, and I think, you know, there's a lot of stuff that happened, unfortunately, in the past, but it is all very much in the past,
and there's a totally new team in town that cares about this in a very serious way.
Like, I'm a gay man. I have a lot of gay friends. A lot of us use Grindr, and it's very personal for me to make sure that our product caters to our
community in a very strong and personal way.
SOLOMON: As an executive, what keeps you up at night?
ARISON: One of the things about the community that we serve is that it's not always easy to be gay in a lot of places, right? And we are in a lot of
the countries where people are prosecuted, where it is illegal to be gay.
So my single biggest worry about, you know, in this job is like, are we doing everything that we can to make sure that our users are protected and
safe in places where that they're not going to be safe because of the government pressure or, you know, societal pressure? And what else could we
be doing to make their life be safer?
This is one of the most amazing things where like, you are this amazing business, but you're also on this mission to help millions of people have a
better life. And you know, this week Senate passed the Gay Marriage Law. And so like, obviously, we didn't plan to go public the week that happened,
but it's actually incredible, and you get goosebumps thinking about that, right?
SOLOMON: How are you feeling just as a tech player, you're seeing all of the major tech players either shed jobs or hiring freezes, rising interest
rates macro uncertainty.
ARISON: Look, a lot of tech companies and some of them are run by my friends probably over hired in the last couple of years. They probably do
it so much and they've spent too much money.
Grindr has not had that luxury because we have been very focused on profitability and ensuring that our EBITDA is very strong and positive and
we will continue to do that.
Right? So, I think being very judicious in how you spend money is important.
SOLOMON: And then lastly, if you had to describe this economy in one word, this economy is?
(END VIDEO CLIP)
SOLOMON: I would agree with that. The implosion of cryptocurrency exchange, FTX of many by surprise and one industry expert says that this could just
be the beginning. A look at what may be to come ahead on QUEST MEANS BUSINESS.
SOLOMON: Welcome back. I'm Rahel Solomon. And there is more QUEST MEANS BUSINESS in a moment when the CEO of crypto giant finance tells CNN what
happened at FTX would never happen at his company.
And Theranos founder Elizabeth Holmes is set to be sentenced for fraud. Prosecutors want her to serve 15 years in prison. Before that, this is CNN
and on this network. The news always comes first. The Biden administration says that the Saudi Crown Prince is immune from a lawsuit over the killing
of Jamal Khashoggi. Mohammed bin Salman and 28 others were sued in the U.S. by Khashoggi's fiance.
She condemned the ruling saying Jamal died again. A White House official said that the determination was about legal precedent, not the merits of
Swedish prosecutors meantime, say that damage to the Nord Stream pipeline was an act of gross sabotage. That's after investigators found evidence of
explosives at the site. The preliminary investigation is ongoing and no charges have been determined.
The U.S. industry regional allies are condemning North Korea's apparent test of an intercontinental ballistic missile.
Japan's Coast Guard said that the missile lands at about 200 kilometers west one of its islands. The Japanese Defense Minister said that it had the
potential to reach the U.S. mainland. The U.S. called the launch a brazen violation of U.N. resolutions.
And Taylor Swift breaking her silence on that Ticketmaster debacle. The company canceled ticket sales to her upcoming tours, saying it could not
handle the demand. Swift called the debacle. Excruciating to watch.
Authorities in the Bahamas have taken control of digital assets held by a unit of the cryptocurrency exchange FTX. The Securities Commission of the
Bahamas says that those assets are being transferred to a digital wallet to protect the interests of FTX's clients and creditors. The Bahamas based FTX
unit filed for bankruptcy protection on Tuesday.
And the exchanges stunning collapse has left many people wondering about the future of cryptocurrency. The CEO of Binance says that what happened at
FTX could never happen at his exchange. Changpeng Zhao spoke with our Anna Stewart about what went wrong with FTX.
CHANGPENG ZHAO, CHIEF EXECUTIVE OFFICER, BINANCE: We never thought of them as our rival.
ANNA STEWART, CNN REPORTER: Really?
ZHAO: There -- at least a magnitude smaller than us. So, taking market share away from them, don't they help us, right? So whereas growing the
industry helps us, so we don't have the rival mentality, they may do --- other people may -- other people love to see people fight. So they always
STEWART: At least Sam Bankman-Fried said you won on --
ZHAO: I think he may look at us as a rival but we don't care about them. Right? So even if we take all of their market share which we haven't, it
doesn't move the needle for us. We're already 10x bigger than. We have always been 10x bigger.
STEWART: You then said that you're going to rescue FTX. But the due diligence came and finance for that very quickly. What was it that you saw?
ZHAO: So, Sam calls me like about 48 hours after that tweet. And then he says he needs a buyout. I knew when he comes to me, I got to be the last
person on the planet that he will go to. So he probably went to a bunch of other people, they all pass (INAUDIBLE) OK, we'll take a look. We want to
protect the users. Actually don't -- we don't care about, you know, the company and the FTX, et cetera.
But we want to protect -- we know they have users, so we want to help them. So we signed a non-binding LOI to say, look, let's do some due diligence
and try to figure that out. Literally, we -- like as soon as that was announced, there were news articles on the U.S. regulatory investigations.
Were like, OK, bam, we can't touch it.
STEWART: The new CEO of FTX who's overseeing the big restructuring said he has never seen such a complete failure of corporate controls. And this is a
man who looks at the fallout of Enron. I mean, could this happen at Binance? Could you make decisions like this that have no oversight?
ZHAO: No, we don't -- we don't -- this cannot happen in Binance. Everything in finance is done through multiple people, multiple layers, there's checks
and balances. Most sensitive operations in Binance require two people involved. So we already have this kind of systems in place. Obviously, FTX
probably did not have this.
SOLOMON: And a top crypto venture firm expects the fall of FTX to also bring down other trading firms in the coming weeks. And a letter to
investors, Multicoin Capital said that the contagion fallout from the collapse of FTX and its sister trading company, Alameda will result in many
other firms being wiped out and shut down. Multicoin performance is down 55 percent this month. That's due to its exposure to FTX and the broader drop
in crypto prices.
Kathleen Breitman is the cofounder and CEO of Tezos. That's an open source blockchain platform. And she joins me from Miami. Kathleen, good to have
you. So, you say -- you said on Twitter, one of the first red flags you noticed is that you actually knew more about SPF than you knew about the
business. Walk me through that. This idea that maybe his character has persona overshadowed the actual work.
KATHLEEN BREITMAN, CHIEF EXECUTIVE OFFICER, TEZOS: Yes, absolutely. So, I mean, you just had the CEO of Binance on which is of course -- or was of
course FTX's largest competitor. Binance came onto the scene in a very aggressive way. Similar to FTX in 2017, 2018, except they actually had some
like novel approaches. They were fastest line people up. They had a token associated with trading discounts.
And, you know, like some of the things that they do, I don't know, I'm not an exchange operator, seemed innovative compared to the rest of the market.
With FTX it was really just about Sam, this like, vegan son of two law professors and oh, Isn't he so clever? But there really wasn't that much of
moving the needle other than extraordinarily aggressive (INAUDIBLE) that they kind of went in on with their venture arm in particular.
SOLOMON: It's interesting. I spoke to one of the editors at Fortune. The crypto editor of Fortune yesterday who said he missed it too. He said he
was charmed essentially by SPF, which sounds a lot like sort of similar what you're saying that this persona was sort of, I don't know, nerdy in a
way that was really appealing. But I'm curious what questions were not being asked that could have perhaps led to a different outcome?
BREITMAN: Oh, well, I think honestly, what we're seeing right now, what's coming out through, you know, all the different audits of FTX is that in a
sense, this is the most poorly run Exchange, perhaps in the history of cryptocurrencies which is a very competitive category. And, you know, basic
things like having proof of reserves, would have -- would have mitigated this. But really just any sort of accounting measures that would have
ensured that people were dipping into the piggy bank of customers, reserves would have been a basic due diligence question.
What's very odd about this is that for the longest time, venture capitalists were actually quite wary of cryptocurrencies in particular. And
so you had specialized V.C. funds prop up. FTX is notable for receiving about $1.8 billion in venture funding over the last few years. From some of
the biggest names who really were reticent to get involved in the space beforehand. And so one would think that would translate into more
aggressive due diligence, but it seems to have been the opposite. They all went to use a crypto term FOMO, fear of missing out.
SOLOMON: Well, and that's a great point, because one thing that I've thought about recently over the last few days is why didn't the larger
players catch it? Is it that they were just so mesmerized by the idea of making a lot of money? Or were they too just enamored with SPF?
BREITMAN: Well, I do think that this is also a byproduct of the mainstream media basically holding up Sam as an example of something who was --
someone who was respectable, you know, poor Brian Armstrong gets pilloried for almost everything that he does. But SPF seemed like Sam Bankman-Fried,
the CEO of FTX scene by contrast, basically, bulletproof in terms of the way that he was portrayed.
And so, I do think that had a bit of a -- bit of an impact on the perception of him as -- like, as a sure bet. And then there was a lot of, I
guess, mythology around him, namely that he was a billionaire before, you know, the age of 27. He was the most aggressive billionaire or person who
received a billion before Mark Zuckerberg even. So, there was a lot of like, oh, well, this is cool, the smartest person in the room.
And, you know, basically, you could be very clever but alas, accounting measures are what's more important for a business.
SOLOMON: Yes. And perhaps, a good example of the dangers of groupthink. Kathleen Breitman, thank you.
SOLOMON: Good to have you.
BREITMAN: Thank you.
SOLOMON: Well, it is the start of a long cold winter for Ukraine and with Russia targeting the country's infrastructure people there are struggling
to stay warm. Ahead, a look at just how bad things could get. Stay with us.
SOLOMON: Welcome back. Power has been restored to nearly all of the 10 million customers across Ukraine who lost power Thursday after Russian
missile strikes. But with Moscow continuing to target the country's infrastructure there's more trouble to come and Ukraine's prime minister is
asking allies for help. He says almost half of Ukraine's energy system has been disabled by Russian strikes.
And he's calling on European partners to provide help in the form of additional equipment and to purchase much needed gas. Without relief many
Ukrainians could be spending the harsh winter months without power, without heat. Or Nic Robertson visited Eastern Ukraine to see how they're
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Gas just came back to Kramatorsk. A boon of battlefield games. Maria, a 70-year-old pensioner
wasn't expecting it had bought a wood burning stove.
It was hard without gas, she tells us, and now, thanks to God we're OK. But for how long?
ROBERTSON (on camera): When the government turned the gas back on here at the beginning of November, they did it without any big announcement because
like every other critical service here, gas depends on electricity, and that's what Russia is targeting.
ROBERTSON (voice over): When I met the mayor here three months ago, he was urging residents to leave ahead of winter.
OLEKSANDR HONCHARENKO, MAYOR, KRAMATORSK, UKRAINE: We do not have gas at all, and it's not possible to repair gas lines.
ROBERTSON: When we meet now, he tells me the population has actually increased by 30 to 35,000 people, over 80,000 total. Residents returning
home even though the situation, because Russia is targeting the power grid is much more precarious. Lives, he fears may be lost in what he expects to
be the harshest winter since independence 30 years ago.
HONCHARENKO (through translator): When electricity disappears, cities are plunged into darkness. Anything can happen. Boilers can stop, gas
distribution networks can stop. It can be left without everything, even without heat.
ROBERTSON: Keeping warm is on everyone's minds. This factory making heating logs from sunflower seeds, demand outstripping capacity.
UNKNOWN (through translator): Our requests have gone up three or four-fold. We don't have enough trucks for deliveries.
ROBERTSON (on camera): They're working at full capacity here. Everything that's ready shipped out immediately. But the whole system here, extremely
vulnerable. The electricity could go off at any moment.
ROBERTSON (voice over): Every log delivered a few hours spared from the cold. Each sack perhaps a week's peace of mind.
Has he got everything that he ordered? His answer. Everything. Everything. All good. Perfect. I don't have words.
Food is also on people's minds this winter. Mostly pensioners, mostly poor bundle up against the cold. A free bread distribution tempting them out of
frigid homes. If they help us like they do here, it will be fine, 84-year- old Yulia (ph) tells us. I'm a child of World War II, she says, we were cold, hungry, but we survived.
Across town, another pensioner, 82-year-old Alexandra (ph), shows us the basement she shares with neighbors, already stockpiling food for winter. No
gas for warmth here, just an old electric heater.
But when there's no electricity, you have no heat. How do you stay warm?
We just have to put on our coats, wrap ourselves in blankets, and go to bed, she says, that's how we live. That's how we exist. Born into war she
says are probably die in war.
Nic Robertson, CNN, Kramatorsk, Ukraine.
SOLOMON: Nearly three years since the start of the pandemic, China is not letting up on its quest for zero COVID But the years long push to stop the
virus is coming at a very heavy price for many ordinary people across the country. A shocking report just ahead.
SOLOMON: Welcome back. While the rest of the world is easing up on pandemic restrictions, China's extreme COVID policy is taking its toll on its
people. Some are so desperate to escape lockdowns, they're taking their own lives. CNN's Selina Wang has more on the story and we do have to warn you
some of the images are very disturbing.
SELINA WANG, CNN INTERNATIONAL CORRESPONDENT: The piercing cries of a grieving daughter. She kneels and cries by her mother who leaves motionless
on the ground still wearing a mask. Her mother jumped to her death from the 12th floor of their apartment building, their compound under lockdown in
the northern region of Inner Mongolia after two COVID cases were reported.
In this widely shared audio recording, the daughter has heard banging on the tall barricades that lock residents inside. She pleased, open the gate,
open the gate. I'm begging you, please. She's eventually allowed to rush to her mother's side. Neighbors filmed the tragedy from their windows. Audio
messages capture their desperate pleas to build in management to be allowed to comfort the daughter. COVID enforcers and police around the body
Local police said the 55-year-old woman suffered from anxiety disorders. A later statement from police blamed managers of the locked building further
In the eastern province of Xandong (ph), a group of COVID enforcers in hazmat suits dragged a resident out into the streets. Two people hold the
man down while others kick and punch him. Another woman is thrown to the ground.
Many cases of brutality from COVID workers have not been held accountable, sparking outrage in China, but this time police without giving a motive for
the attack detained seven COVID workers in the beating.
In Hubei Province, just outside of Beijing, a desperate father stepped out of his car, holding a knife. He tells the authorities his baby son has been
out of baby formula for a long time during lockdown. He gets back in the car and drive right through the COVID barrier.
Moments later, police arrive.
They escort him, handcuffed towards a large group of policeman. They surround him, one policemen sprays him down with disinfectant. He's
arrested, all because he needed to feed his baby.
After outrage on Chinese social media, local police released a statement saying the man have been fined only 100 yen or less than $15.00, and that
his child milk powder problem had been resolved.
These scenes of suffering and tragedy adding to rage over the growing human and mental health toll of China's brute force COVID restrictions. And the
southern metropolis of Guangzhou, residents locked down for weeks rushed to the streets, pushing, taking down red barriers and metal gates, trapping
them in buildings.
Protesters cheering and shouting, demanding that they want to eat, they want to be unsealed, as people struggle to get enough food, essentials and
medical care in lockdown.
Beijing recently announced incremental changes to COVID restrictions but said the country is sticking to its zero COVID policy. And for people that
have lost their loved ones in lock downs, these changes are all too little and too late.
Selina Wang, CNN, Beijing.
SOLOMON: And we'll be back after a short break.
SOLOMON: Welcome back. We're keeping a close watch on a California courtroom where any moment now, Theranos founder Elizabeth Holmes will be
sentenced. Holmes was convicted in January on charges of fraud. Under Holmes, Theranos raised nearly a billion dollars from investors on the
claim that it could run a slew of medical tests using just one drop of blood. The company reached a value of $9 billion but the technology never
She now faces up to 20 years in prison. We will bring you that sentencing just as soon as we get it. And there are just moments left to trade on Wall
Street. The Dow has been holding on to its gains, sometimes just barely. It is now up half a percent or about 190 points. And taking a look at all
three of the averages as I said the Dow is up half a percent. The S&P just about the same about four-tenths of a percent there.
The NASDAQ is down fractionally. You can see it gave up its morning gains and called the back in the late rally. The NASDAQ opening higher but
clearly has struggled to stay in the green as it finishes the day lower.
And that is QUEST MEANS BUSINESS. Pleasure to be with you today. I'm Rahel Solomon in New York. The closing bell is ringing on Wall Street. I hope you
have a great weekend. "THE LEAD WITH JAKE TAPPER" next.