The first sentence in the white paper of Tether (USDT) says the following. A digital token backed by fiat currency provides individuals and organizations with a
robust and decentralized method of exchanging value while using a familiar accounting unit.
Now don't get me wrong. I use USDT a lot, in fact I love it. The fixed price of $1 while being a cryptocurrency makes crypto transactions for purchasing services easy and beautiful.
But I keep thinking of how original paper money was created. In history we had gold for trading. Then gold became inconvenient so bankers offered to hold gold for paper that verifies how much gold is owed to customers. Then this paper became more convenient and was used instead of gold with the trust that its backed by gold. Then this paper a long time later became a currency that isn't backed by gold anymore.
Could the same happen with USDT. If everyone decided to claim original $$$ with their USDT, would Tether Limited issue it all making the price worthless?
Anyway the point I am trying to make is that Tether (USDT) is centralized around the Tether Limited's will to keep it going. This company is basically like a bank too.
Obviously it is not decentralized, they may claim to be but that does not make it true, and what you are describing is precisely why bitcoin was created on the first place, once a centralized entity gains the upper hand it is simply too tempting to not abuse their power, after all what are their users going to do about it? So during the last years there have been accusations against USDT of not having a 1:1 ratio when it comes to the coins in circulation and the dollars stored on their vaults, so anyone that uses any of the stable coins in the market should remember that those coins are not meant to be held for the long term and are just a way to get out of the market if it is crashing and protect your capital that way, but once it is done then it is time to go back to the cryptocurrencies that you trust.