I partially disagree - the fact that crypto is unregulated isn't the main issue. Even if regulations existed saying that 1:1 ratio in cash needs to be held, Tether would simply operate in a jurisdiction that doesn't require it. regulations must be enforced, and therefore, can always be skirted.
the main issue is that Tether has claimed that they will maintain a 1:1 ratio. regulations or not, they've stated publicly that they will maintain this ratio, to ensure the peg remains.
if they decided to use the cash for something else to make profits in the meantime, that's misleading and dishonest.