Purely on the theoretical and speculative level lets go through this. Consider that someone wants to "cash out" their tether. They put it up for sale at 1 USD.

Purely on the theoretical and speculative level lets go through this. Consider that someone wants to "cash out" their tether. They put it up for sale at 1 USD. Now either the people behind tether buy it at 1$, or it goes to someone who's offering 0.99$ in the hopes it'll be sold later at 1$ (eg. the rate falls). But you say, how can the people behind Tether afford to buy it if they haven't actually been backing their issued Tether?.... Well the answer is it's just one dollar we are talking about, they have plenty of cash, they can afford to give you a dollar to maintain the exchange rate. But what then when everyone tries to get out at the same time? Well then in the case that they aren't lying, they can just use the USD backing the Tether to maintain the exchange rate. If they are lying, then we see a run on the bank and everything collapses. They get out fine because they were manipulating the market and made tons of cash moving first on BTC, then on the alt-coin of the day, and got out before the downwards tendency caused everyone to want to cash out. Essentially market manipulation in it's finest, a Ponzi-scheme with people printing their own currency to pump-n-dump not just on one entity, but the entire crypto-space. That's one hell of a story!