Tether the company guarantees it will buy all tether for $1 each. The drop in price reflects people suddenly realizing they can’t do that if everyone tries to turn in their tether at once.
Surely it is very difficult for a company to "guarantee" anything about the price of a commodity sold in a large open market. There are all sorts of reasons prices go up and down, it seems hubris to imagine you can tether anything.
It would not be that difficult to guarantee Tether price if tether actually did what they originally claimed. Take usd in, store that in diversified bank accounts/liquid treasuries, and if there ever is downward pressure on the Tether price, use your high quality liquid reserves to buy Tether back (while making profit!). And of course, if you are open and audited on your operations, there is very little reason for a downward pressure for the price.
Now, of course, if you decided to _not_ be open and _not_ hold your reserves in safe assets but instead decided to invest the reserves to speculative gambling tokens or shady commercial papers, then it really is difficult to keep the guarantee if the gambling token loses value.
Theoretically, they could guarantee it by just holding all dollars they are given originally.
A price is just an abstraction for the willingness to buy and sell. If you know there are 1000 of some token in the world, and you have 1000 of some item, you can guarantee that people will always be able to buy one item for one token - by selling your items to them at that price.
But of course, just holding the dollars makes it hard to profit.
In theory you should be able to do it if you always have reserves worth more than the total number of outstanding tether. If you distribute 40b tether and have $50b in liquid cash, you can guarantee that you will pay exactly $1 for each tether. Obviously everyone holding your coin is exposed to changes to the value of your dollars, but you can always give them $1 for 1 tether. The problem is of course that you can make a great deal more money for yourself if you invest in riskier ways than holding liquid cash.
I don't think the Black Wednesday situation is similar, because the UK was never going to be able to hold enough of the currencies it was supposedly pegged to to make that same promise. Definitely not my expertise there though!
