The fact that they don’t publish financial statements that have been audited by a major accounting firm on a regular basis clearly indicates that the whole thing is a massive fraud.

Bernie Madoff’s operation sucked in billions for years and years. Were there an audit at any point, the scam would have been revealed.

So you are saying instead of cashing out the btc into usd holdings they simply held onto bitcoin? Wouldn't that make them filthy rich?

No, I'm saying that when people on exchanges like Bitfinex "cash out" they're really getting freshly issued Tether that isn't backed by anything. It's fraud. The scam works as long as you can keep the price pumped up (new Tether issues seem to occur like clockwork during BTC sell offs), but if the price plunges they'll be insolvent in a hurry. Let's say they bought BTC with $100m of freshly minted USDT back when the price was $20,000 (round numbers are easier)... Instead of $100m in USD backing that issue they would now have ~$50m in BTC. Tough luck for anyone who wants to exchange their USDT for USD.

This would be something like a run on a bank, except without the FDIC to step in and make sure everyone gets their money out.

Accepting USDT is akin to giving Bitfinex an interest free loan with a high chance of default--no possible upside and lots of possible downside. No one should use any exchange that deals with USDT in any way.

It would make them "bitcoin rich". They still would need to convert to USD at some point. Which, if their buying and holding is what drove the price higher, would subsequently crash the price.