How is Tether a Ponzi scheme, and what will it take to make it collapse?

My (very limited) knowledge of the situation is... people buy some tether, which "should" be backed 1 for 1, then with that tether they just bought they swap it for a bitcoin (or other crypto)

But people think the people who run tether instead of keeping that $1 as a reserve, use it and instead are buying more crypto with it.

Is that right? Or am I totally off? And if that is correct who is on the other side of this trade accepting tether if people think it's basically a scam currency?

And what will cause this all to unravel? Surely the longer it goes on the worse it will get?