Wouldn't it be quite difficult to "hide" $118Bn of assets that supposedly back Tether?

I, for one, find it difficult to move a couple of thousand dollars without being questioned. 

A problem is even if they did have $118Bn bank deposits, their bank could fail. Concern over USDC's bank failing caused them to de-peg. There isn't a sure way to peg a stable coin. Each comes with it's own liquidity risk. 

That is why Bitgold was experimental, where Bitcoin is the real thing.