Problem is, Tether doesn't actually buy back USDT from anybody. Nobody has successfully converted their USDT to USD through Tether...only via USDT -> USD market

Problem is, Tether doesn't actually buy back USDT from anybody. Nobody has successfully converted their USDT to USD through Tether...only via USDT -> USD market on Kraken, or more commonly USDT -> BTC -> USD. In other words, it's like a bank you can only put money into, but not take money out of, and you can only redeem your money by finding some poor sucker who'll trade your USD vouchers for some other currency that's actually worth something. Unless you're just talking about maintaining the peg by buying large amounts when the price falls below $1. In that case, yes they'd have to sell BTC to maintain the peg because it's conjectured that they back USDT with BTC (not USD), and even with the BTC they have, at its market value it wouldn't actually back the amount of Tethers they've printed.