So here's the scheme (or scam depending on your point of view): 1. Tether exchanges BTC for USDT 2. Tether prevents people from exchanging USDT for USD 3.

So here's the scheme (or scam depending on your point of view): 1. Tether exchanges BTC for USDT 2. Tether prevents people from exchanging USDT for USD 3. Tether immediately sells their newly gained BTC for USD 4. Ideally Tether would back USDT with a 1:1 in assets in USD. Point #4 is under debate. But since #2 exists it's unclear that even if #4 is true, Tether would stop a run on USDT. What it really looks like is that Tether figured out a way to extract capital out of the crypto market by buying assets and replacing them with worthless IOU's. Meanwhile the founders have walked out the back door with suitcases of cash.