Exchange it for what?
If you exchange it for a record entry for anything (whether dollars or Bitcoin) in a Binance (or affiliate's) account, you're exchanging one IOU for another. Given most USDT trades on Binance and its affiliated entities, this loops right back to the withdrawal problem.
A "stable" coin that cannot be readily redeemed and is not fully reserved is a Ponzi scheme with extra steps.
There are plenty of valid criticisms of USDT. Saying that it is hard to exchange 1 USDT for a dollar's worth of Bitcoin that you control is not one of them.
Until it's in your wallet, it's an IOU. And Binance has had issues with Bitcoin withdrawals, too. (Not to mention, they seem to lose their cash and coins to hackers [1] and fraudsters once a quarter.)
There is no independent, trusted marketplace where USDT trades in material volumes. And we now know that Tether previously lied about its dollar reserves. Continuing to trust them is delusional at best.
[1] https://www.bloomberg.com/news/articles/2019-05-08/crypto-ex...
The hard part is exchanging USDT (or bitcoin) for actual money since banks don't want to touch crypto with a 10-mile pole.
Extra steps, and the delay they introduce, may be all a ponzi needs to sustain itself sufficiently to permit quiet exits. That the market will eventually be consistent is, alas, not the current manipulators' problem.
People here seem to misunderstand what USDT is used for. It's not to invest in.
It's used to trade against BTC at exchanges which do not have access to USD markets. The gambl^Wtraders there probably couldn't care less about how collaterized it is. The threat model is and has always been that Binance or Poloniex or whatever they're called disappears with your money, tethered or otherwise.
If you had 5M USDT, how much USD do you think you'd get if you tried to liquidate that position on that exchange right now?
If you push the price down with $5M, it will jump right back up.