[bhouston]

Nouriel Roubini:

"Like any not credible fixed exchange rate regime that is not backed by enough reserves, Tether/USDT collapses when they run out of true dollar reserves. And since Tether/USDT 1:1 peg to the US$ is the mother of all scams it will soon collapse taking Bitcoin down with it."

https://twitter.com/Nouriel/status/957623357708668928

[panarky]

If traders lose confidence in Tether, won't they sell Tether to buy other cryptocurrencies, thereby driving the price of Tether down and the price of other cryptocurrencies up?

[dharma1]

Initially yes, but I think we would also see a flight from cryptos in general shortly afterwards because of the risks posed to the whole space by a collapsing/fraudulent Tether.

[Grangar]

That's what I'm expecting to see. An initial run up in crypto value, followed by exchanges collapsing because they relied on USDT in place of fiat.

[panarky]

Why would exchanges collapse if Tether goes to zero? They wouldn't collapse if Ripple or Iota went to zero.

To an exchange, Tether is just another cryptocurrency. Traders deposit Tether, other traders deposit Ripple or Iota, then the traders trade and the exchange takes a cut.

If any of these goes to zero traders might get wiped out, but how exactly does the exchange go bankrupt?

[ceejayoz]

Only if anyone's willing to take Tether at a non-zero price.