4I think you have it the wrong way round. If a Tether goes above $1 (say $1.05), Tether Ltd can make 5 cent by issuing a Tether and selling it for $1.05. It owes $1, but owns $1.05. Conversely, if the price of a Tether goes below 1$ (say 0.95$), then Tether can make 5 cents by buying a a Tether for $0.95. It owns 0.95$ less, but owes 1$ less, making it a 5 cent profit. If Tether keep doing this, they could make a profit.

The problem as a I see it is that a) we have no proof of Tether's reserves (and the onus is on them to prove it, not us) b) I can't see the above mechanism working, because Tether can only really be bought or sold in BTC. c) I don't think Tether Ltd (if it even exists as an incorporated entity) even has access to dollar bank accounts.

A possibility is that Tethers are in fact backed by BTC.