[lamontcg]

If USDT collapses it will take out multiple exchanges with it, and the fact that you have a winning position won't matter if the the people running the exchange it was on have entirely disappeared to sandy beaches somewhere. Counterparty risk during the systemic "banking" collapse will be very high, and completely uninsured.

[bb88]

If you have extracted the cash in dollars somehow before the crash, then it would work, but you have to move your money out of the exchange as fast as you can.

[lamontcg]

The collapse of Tether is likely to be right in the middle of the crash and the exchanges will have suspended withdrawals already, and everyone will be looking for a lifeboat.

You have a database entry showing that you have a large amount of winnings that you can see on your screen.

You are going to have to deal with corrupt human beings on other end, who are outside of your jurisdiction, and are assuming they are just going to wire your bank account money based on that database entry, when you have no leverage over them at all, and when they will be better able to see the writing on the wall than you do.

Even within your jurisdiction, for something like Coinbase, if it becomes completely insolvent then you become an unsecured creditor in the bankruptcy liquidation process.

You'll be stuck yelling into the ether making twitter posts shaming them for not wiring you your winnings. And whatever actual cash you sent them to make those bets will be long gone and you'll lose everything.

Even assuming you could find some form of betting market outside of the crypto exchanges to place bets with other people that Tether would collapse the interest you have to pay should more than offset the eventual winnings. This is similar to how using options for portfolio insurance is a poor idea because by the time you're worried about your portfolio losing value everyone else can see the issue as well and wants a premium to write you that insurance.

And there's no sure bet that Tether/crypto collapses in the near term. I suspect that crypto will likely pop to a new bubble blow-off peak in 2022 and then 2022/2023 there will be another systemic test of crypto that could lead to its failure. But there's many billionaires with a vested interest in seeing the game continue who will do whatever they can to kick the can further down the road. I thought that it would fail in 2018 and was wrong (but the transcripts with bitfinex showed that it was probably on the brink). You could wind up betting Tether collapses for so long that by the time it finally does you've spent more on those bets than you've won back.

[londons_explore]

All exchanges require staff interaction for large withdrawals. You can be sure that in a very volatile market, friends of exchange operators will get priority.