Asset. Not assets.
There is only one asset that an operation so big and trusted by so many should hold and that is U.S. Treasuries.
If you feel frisky you could do G-8 govt. bonds but that's about it really. And you are taking a chance on the forex exchange.
FTX just imploded because they didn't realize this simple fact. If you are a custodian and you are not advertising yourself as an active asset manager you should stick to US Treasuries and even that could be considered a breach because you should keep USD in a bank.
Keep USD in a bank and you have nothing to fear.
Tether themselves seem to be based in Taiwan: https://assets.ctfassets.net/vyse88cgwfbl/RPHIloRD3eE4J5QYNR...
Taiwan's extradition situation is .. informal. Because Taiwan does not officially exist. But there have been extraditions from Taiwan to the US.
They fully knew this. There is no business in keeping USD in USD (or US bonds for that matter.)
1 real billion > 20 make believe
The fact that people are willing to trade their USDT coins for less than 1 USD means that they do not believe those "real-world assets" exist in sufficient quantity. In other words, they are afraid that Bitfinex (USDT issuer) is scamming them and prefer to convert to American dollar, even at slight loss.