That's buying and selling. So, whoever is facilitating the buying and selling needs to keep Tether inventory on hand so their customers can trade crypto generally. Those holders of Tether inventory -- exchanges -- will be "free" to redeem their Tether when crypto transaction volumes decline on their exchanges. So when the crypto ecosystem broadly loses cachet, beyond a certain threshold, exchanges that hold Tether inventory will be "free" to liquidate.
The issue at that point will be that exchange volume is the business value behind the "paper" that justifies Tether's USD peg. So declining crypto trade will generate sell volume against Tether and also pressure the peg.
Which is all another way of saying-- this is like when Enron or whatever other financial scandal you pick-- gave shares to an off-balance-sheet vehicle and loaned itself money from the vehicle. It's designed to fool someone into injecting real money into a funny system. Thus, an alternate mode of failure is that whoever did the injection wakes up and calls the bluff, notwithstanding the technical quasi-market-based peg.
The issue at that point will be that exchange volume is the business value behind the "paper" that justifies Tether's USD peg. So declining crypto trade will generate sell volume against Tether and also pressure the peg.
Which is all another way of saying-- this is like when Enron or whatever other financial scandal you pick-- gave shares to an off-balance-sheet vehicle and loaned itself money from the vehicle. It's designed to fool someone into injecting real money into a funny system. Thus, an alternate mode of failure is that whoever did the injection wakes up and calls the bluff, notwithstanding the technical quasi-market-based peg.