This is why being liquid and freely trade-able matters. Tether is fully redeemable if you can trade it against other crypto/stable coins. Want to redeem USDT? exchange it to USDC and then withdraw to your bank account.
So again I ask - how do we have any proof that Tether has the reserves they claim they do?
USDT are redeemable to your bank account if you have a good sizable balance (talking 7-8 figures). You'll get it deposited from some of their offshore shell companies. But you didn't hear it from me :)
But the degree that this is happening pales massively in comparison to the billions that are sat on exchanges and recycled.
Tether would be the first legitimate billion dollar operation where people have to say things like "but you didn't hear it from me".
I'm not an expert, so I might be wrong (seriously, not sarcastically). I _think_ this is technically arbitrage even though you never complete the loop.