In all seriousness, who needs USDT when you (supposedly) got USD? Who would wire millions of actual USD to buy USDT to buy other coins?
You have $1M in dirty money. Wire it to Tether for some Tethers. Go on Bitfinex and buy lots of bitcoin. Transfer the bitcoin to a legitimate exchange. Sell for clean USD.
This could be a very valuable (and lucrative) service in certain circles, I have no doubt. One thing that could jeopardize the livelihood (...and lives?) of people running a business in this space would be a steeply falling Bitcoin price. They would probably do anything to keep the price up. Like issuing more magic tethers and buying Bitcoin with them.
Why USD -> USDT -> BTC -> USD?
Why not USD -> BTC -> BTC -> BTC -> USD?
What does the extra layer of USDT really add legally, except for some added obfuscation that a few extra "intra-bitcoin" transactions would add as well?
(Genuine question, this is one of the more fascinating stories I've heard in a while :-)
USD -> USDT and back is traceable using standard investigations of books and banking transcripts of entities dealing with Tether's managers.
Also, Tether is by now an internet-wide phenomenon. It's in the spotlight. And yet it keeps growing.
I can imagine that there are bank accounts out there full of USD that, let's say, wouldn't pass KYC/AML. Those people can't use Coinbase/Gemini, but maybe they are welcome at Bitfinex.