Many of their customers (if not most, on volume) wired USDT obtained from other parts of the ponzi ecosystem, then traded them internally for dollars. This way, FTX could accumulate internal USD liabilities without ever having those dollars wired into their accounts. Even if we were to take at face value the $5 billion liabilities from SBF's "Excel ballancesheet", that's still less than a third of the loses.

Sure, Tether should have a 1:1 backing to real dollars or dollar denominated assets - but it's like the ponzi-world's worst kept secret that they don't, as we'll soon find out.

If most of the losses are USDT, how do we know Tether didn't just print them out of thin air to lend to FTX / Alameda as their "Commercial Paper"?

That would be my first guess.