I keep forgetting that tether mystery. Maybe nobody really wants to know the truth because it could lead to a brutal market crash.
Worst case scenario: Tethers are literally nothing in every sense of the word, backed by nothing.
Best case scenario: Tether has engaged in shady, borderline-illegal financing, but at the very least has some actual fiat money they have access to to back up the Tethers.
If there is ever a rush to convert Bitcoin to USD, it will be a big deal when people realize there is not enough fiat in the system to support the price, and the value of 1 USDT becomes 0 USD. The whole crypto market would likely be in the dumps for a year or more at that time. A major investigation might not happen until then.
Edit: FYI, you can see when Tether creates new USDT for itself here:
http://omnichest.info/lookupadd.aspx?address=3MbYQMMmSkC3AgWkj9FMo5LsPTW1zBTwXL. As others have pointed out, the market has a tendency to overall go up shortly after every issuance of more Tethers. The last creation event was 25 million USDT on September 14. I'd be happy to be proven wrong, but it appears as though they can create them whenever they want.