Because the leverage extended to customers is greater than the value of collateral the exchange holds. It is certainly possible if Tether dropped to 0.8 or some

Because the leverage extended to customers is greater than the value of collateral the exchange holds. It is certainly possible if Tether dropped to 0.8 or something this would cause even automated liquidation and margining engines to fail then causing a systemic shock across all posted liquidity on the venue.