This exodus doesn't really prove anything about the composition of the assets, same way the money coming onto the books originally proved nothing.
Tether admits that most of their assets are made up of commercial paper (aka bonds issued by companies). Suppose the minted USDT was given to the companies issuing those bonds themselves, then to reverse this, you don't need USD. You can simply cancel the debt and burn the USDT without a single dollar changing hands in the entire process. But dollars do change hands -- as payment for Tether's service of continuing to keep USDT going so those corporates can exit cryptocurrency at some point, in the form of interest on the commercial paper.
If a major counterpart was Binance, for instance, Binance could offer no cash upfront, issue a bond for a billion dollars to Tether, accept USDT1bn in exchange, use USDT to buy bitcoin, sell the bitcoin as USDT1bn + profit (and convert that profit to e.g. USD), and hand back the USDT1bn + interest, & cancel the bond. That's essentially the running theory of Tether's operation. Money flows overall from whoever bought Binance's cryptocurrency, to Binance, and to Tether. And Tether maintains very little cash whatsoever, as there is no need unless everyone wants to redeem at once. And in this situation their plan is just to throw up their hands and say "we prioritise our customers" which is basically Binance and whoever their actual customers are, i.e. the issuers of commercial paper, not you.
>Tether admits that most of their assets are made up of commercial paper (aka bonds issued by companies)
No, at their attestation 2 months ago, "Commercial Paper and Certificates of Deposit" was 24.38% of their assets. This is much less than the "U.S. Treasury Bills" which was 47.56% of their assets.
Sure, maybe now it isn't, but in June 2021 that figure for commercial paper was 49%. Their most recent claim is a few days ago, during this big exodus of money off their books, and it involved a reduction of at least $4bn worth of commercial paper. So I think it's a very relevant thing to point out that this $10bn didn't necessarily mean they allowed for $10bn of cash withdrawals but rather some cash and some cancelling of debt denominated in USDT. Overall remember their reporting is not particularly trustworthy given how little (non-existent) outside scrutiny they allow it to receive. These are all just numbers they could be making up to explain the things we can see.
Who cares about their attestation? It is not a proper audit. They could just borrow money from Bitfinex, take a screenshot of them holding the money, saying "see, we have money" and then return to Bitfinex on the same day.
They are not a reliable narrator, and they have been convicted in multiple jurisdictions over fraudulent statements. There is no "reasonable" argument that this time they should be trusted.
This will only be solved when completely implode or in the miracle shot that they pass through a rigorous independent audit.
