Given the seemingly endless list of shady activities that Bitfinex and Tether seem happy to engage in, how can you be sure they haven't done what I've just described?
The thing with Tether is that we're never really going to know anything. I can certainly believe it's been fully backed at certain points, but that doesn't mean they didn't leave gaping holes in the past that were subsequently refilled. This present situation could be just another example.