In a simplistic manner, the system for breaking 1 to 1 is as follows:

1) The attacker (either an individual or organization with substantial wealth to invest in this endeavor) identify a potential mismatch - i.e. a "subnetwork" that is weakly linked in terms of trust and have an substantial import/export imbalance; i.e. that there is ongoing demand for that subnetwork to buy stuff from elsewhere, and due to that historical imbalance that subnetwork has comparably few outside coins, and the main network has comparably a lot of the subnetwork's coins. Ideally, that subnetwork is one large "coin validator" as described in the original paper, but constitutes a small part (say, 0.1%) of the whole market. Lets call those coins PoorCoin.

2) You borrow PoorCoin (assuming that the currency is in wide practical use, that shouldn't be an issue - none of the cryptocurrencies eliminate the need for credit, and if it becomes popular, credit will be made in it). A lot of it. If collateral is an issue, you provide it in other coins or US dollars. A lot of it - cornering the market is the goal. In a sensible market, actually, that will be very visible and that by itself will be enough to break the 1-to-1 peg; that's what happens with real pegged currencies - pegged currencies require sufficiently huge reserves to clearly demonstrate that breaking the peg takes more resources than anyone can afford, and the peg is lifted as soon as it's obvious that a credible attack is possible. If it happens now, then you buy PoorCoin at the new (lower) exchange rate, pay back your loans, and profit from the change.

3) Otherwise, for every single Alice in the 'rich' part of the network who trusts poorcoin, you "trust Alice", and immediately send through as much funds as you can to yourself, converting the PoorCoin to AliceCoin. This is the key flaw of the system - you can force an arbitrary large number of 1-to-1 trades without the possibility to get refused, unless Alice stops trusting PoorCoin (in which case you win anyway). Then, use AliceCoin to borrow more Poorcoin. You have to control more wealth than all the Alices combined (that's the goal of #1, to identify a market where you can do that), so that you can drain all or at least most of them. This is the key part of the attack - you remove the possibility for 1-to-1 trades by taking all such opportunities and saturating the market.

4) People on the PoorCoin subnetwork want (need!) to buy stuff from the main network, and find out that they can't. The pool of people who were willing to take PoorCoins at 1-to-1 is exhausted or highly depleted because of your actions; some people are willing to do so but not enough to sustain the ongoing PoorCoin trade imbalance. In the main network, people become wary of PoorCoin, since it has become obviously different from the rest of the coins, it's harder/impossible to spend with the usual, automatic 1-to-1 trade. So..... eventually some of those people offer a trade at less than 1-to-1, because they want those imports even if the price has suddenly raised. And that's it; you've accumulated an enormous short position of PoorCoin, you gradually buy it back with normal coins and due to the lower exchange rate in the end you have a lot of normal coins left over.

This profit happens at the expense of all the Alices who trusted PoorCoin (and thus would be rightly fearful and less able to trust any other such subnetworks in the future), and at the future expense of everyone earning PoorCoin, whose income just fell.

Blacklisting all new coins from me is a non-issue - this attack doesn't work on small scale, it fails with amounts that are too low to break the peg and succeeds when the amount is large enough; one person's lifetime UBI doesn't make a difference on a large scale exploit. It takes some effort to make, but when implemented, it brings great rewards, so it'll attract organizations that are able to do it in an organized manner as sneakily as possible (i.e., it's worth for them to create sham organizations/buyers to mask their intentions at some point). In real world currencies, this is futile with hundreds of millions, but feasible with many billions for a smaller currency (IIRC some $30 billion for the Thailand baht back in 1997).