Every USDT they buy below 1 USD will increase their "backing level". So if they only stole let's say 5% of the funds to buy cars and boats, a price drop could slowly move them back to 100% backed.
Assuming they have all the USD somewhere, but locked in all kinds of instruments (bonds etc) they would not be able to pay out without rapidly increasing wait times. And that will drop the price more and more because it increases doubts on whether they really have the USD.
That drop further incentivizes them to use the USD that they do have quick access to to buy USDT on the market instead of pay-out their 1:1 redemption option. Which will increase the wait time even more and thus drop the price even further as USDT holders get spooked.
But in most of those scenarios the guys behind Thether will make a lot of money.
Assuming they have all the USD somewhere, but locked in all kinds of instruments (bonds etc) they would not be able to pay out without rapidly increasing wait times. And that will drop the price more and more because it increases doubts on whether they really have the USD.
That drop further incentivizes them to use the USD that they do have quick access to to buy USDT on the market instead of pay-out their 1:1 redemption option. Which will increase the wait time even more and thus drop the price even further as USDT holders get spooked.
But in most of those scenarios the guys behind Thether will make a lot of money.