Tethers are used on exchanges that don't deal in dollars. Traders who want to sell Bitcoin for USD sell them instead for USDT (Tether). Theses are the people

Tethers are used on exchanges that don't deal in dollars. Traders who want to sell Bitcoin for USD sell them instead for USDT (Tether). Theses are the people who are buying the newly issued Tether. New Tethers are issued so that USDT stays very close to $1. This works great as long as Bitcoin continues to go up relative to the dollar. If/when Bitcoin goes down significantly theses same exchanges would need to buy up Tether to keep the price near $1. But that means the issuers of Tether will have to give up the massive profits they are currently reaping. If they don't the house of cards comes crashing down.