Here. They can redeem with the reserve assets instead of with dollars, and are not liable if the reserve assets decline in value due to illiquidity etc
They also refuse to disclose the nature of their reserves beyond unaudited attestations, and are known to have lied regarding their reserves multiple times before and admitted as such in a settlement.
> Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all.
> 14.8. any delay in withdrawal or redemption, or loss of value of Tether Tokens or the Reserves backing such Tether Tokens resulting from failure or insolvency of any bank, depository, custodian, borrower, or payment processor holding or processing the assets backing Tether Tokens, or from the theft of such assets, or from freezes, seizures, or other legal process asserted by a Government; or
In addition to that, here's the section on consequences for prohibited use:
> Any use, whether actual or suspected, as described in this paragraph shall constitute a “Prohibited Use”. If Tether determines that you have engaged in any Prohibited Use, Tether may address such Prohibited Use through an appropriate sanction, in its sole and absolute discretion. Such sanction may include, but is not limited to, making a report to any Government, law enforcement, or other authorities, without providing any notice of you about any such report; confiscation of any Fiat, funds, property, proceeds, or Digital Tokens in any Digital Tokens Wallet that you have on the Site; and, suspending or terminating your access to any Services or Fiat, funds, property, or Digital Tokens from any Digital Tokens Address.
So they can confiscate all of your funds if you engage in prohibited use. What might that entail? In addition to the normal money laundering, committing crimes, etc, they count such dastardly things as:
> 8.8. use the Site or any Services to engage in conduct that is detrimental to Tether or to any other Site user or any other third party;
> 8.14. where you are subject to prohibitions or restrictions as set forth in paragraph 3 [Identifying yourself as being from the US], access the Site or use any Services utilizing any virtual private network, proxy service, or any other third party service, network, or product with the effect of disguising your IP address or location, or access the Site or use any Services using a Digital Tokens Address in or subject to the jurisdiction of any Prohibited Jurisdiction or Government or Government Official thereof; or,
> 8.15. violate, cause a violation of, or conspire or attempt to violate these Terms of Service or applicable Laws.
So if you break their TOS, lie about being from the US, or engage in conduct that's detrimental to Tether, they can just take all of your money and tokens per their TOS.
They also refuse to disclose the nature of their reserves beyond unaudited attestations, and are known to have lied regarding their reserves multiple times before and admitted as such in a settlement.
> Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves. Tether makes no representations or warranties about whether Tether Tokens that may be traded on the Site may be traded on the Site at any point in the future, if at all.
> 14.8. any delay in withdrawal or redemption, or loss of value of Tether Tokens or the Reserves backing such Tether Tokens resulting from failure or insolvency of any bank, depository, custodian, borrower, or payment processor holding or processing the assets backing Tether Tokens, or from the theft of such assets, or from freezes, seizures, or other legal process asserted by a Government; or
https://tether.to/en/legal/