Here’s how Tether could collapse according to Reddit.

June 14, 2022

Stablecoins have come under a lot of heat after Terra’s algorithmic stablecoin UST collapsed and triggered a widespread crash in the crypto market.

Tron’s stablecoin USDD is also breaking its peg from the US dollar as it causes panic among the investors.

The stablecoin with the highest market cap, Tether, could also face a similar fate if these scenarios occur, according to Reddit.

The only way tether will collapse is if they’re lying about the backing of their stable coin and they have an overwhelming bank run. Basically like Celsius, reddit user Sad-Dot000 posted.

Another user posted that if Hong Kong launches an investigation into BitFinex, then there are chances that stablecoin could witness a collapse.

Some believe that if whale and retail USDT investors decide to cash out simultaneously, then we might see USDT depeg from the dollar.

Unlike Terra’s UST, USDT is backed 100% by Tether’s reserves.