So, who is holding 2.5B USDT tokens and what do the masses do with USDT(other than short-term[1-2 days] transfer of value)?
That's a very good question. I guess nobody in their right mind would use USDT for anything else but short term trade.
It is a complex situation indeed. Even the short term you mention is not defined. Is short term one week? One month? Three? Six? One year? Nothing is clearly defined n cryptocurrency. What is short term to you can be long term to another. I have to say that I love the idea of exchanges providing tether. It serves a means of preventing loss during crash. I do not care about the mathematics of it.