If there is not sufficient USD to back them then its fraud. People purchased these securities relying on the representations they made about it being backed by USD.
The specific claim that was made by GP, and the claim that I see bandied around, is that Tether is a Ponzi scheme.
Tether doesn't appear to share any characteristics with a Ponzi scheme, which is why I am puzzled to see people so adament it is one.
The most important characteristic (IMO) is that there is no promise of a return. $100 of Tether will only ever be worth $100 maximum.
If anthing, Tether is basically operating as an unregulated bank. You're not calling banks Ponzis are you?
How exactly is X making a profit when they're just working as an intermediary? Why do they absolutely refuse to show their finances? How exactly are they getting the resources to do all this?
Now, am I talking about Ponzi or Tether?