You're right to ask that question because here's the neat part: they're not. There's no way of knowing that Tether or any other stablecoin is actually fully backed up with anything. So there's a good chance they're not or otherwise the company would surely be happy to provide the proofs and brag about it. That means, in turn, that it's all a very dangerous game that works as long as there's a lot of liquidity and trust in Tether. But if anything happened that suddenly motivated the majority to sell all their Tether and keep their belongings is other cryptos, it would probably lead to a disastrous explosion of the price.