Because your execs are affiliated with other companies and suddenly those other companies lack liquidity and need a loan. If you’re Tether, that other company i

Because your execs are affiliated with other companies and suddenly those other companies lack liquidity and need a loan. If you’re Tether, that other company is Bitfinex. If you’re FTX, that other company is Alameda. If the other company makes good use of the loan and recovers to pay the original company back — great, you still have enough assets to cover your deposits. That may be what happened with Bitfinex. On the other hand, the other company might go tits up. Now the first company has no money to cover deposits, declares bankruptcy, and if all is right in the world the execs see some punishment.