Arbitrage isn't magic. The only way arbitrage can push BTC-USD prices up to match BTC-USDT is if the arbitrageurs are selling a proportional amount of USDT for USD. Either they're redeeming them with Tether, which some claim isn't actually possible (?), or they're selling them on USDT-USD markets. Since those markets still trade around $1, it's safe to assume there is not some massive imbalance for selling USDT over buying it.
Tether might be shady in all kinds of ways -- their operation has a lot of red flags to it. But it basically can't be responsible for massive BTC rises all on its own, because the rises happen even at pure USD markets, and that can only happen when a lot of real USD actually got injected.