How are they any different? They both do fractional reserve banking. If anything, Tether is more robust because they aren't controlled by central banks.
A random individual in the street can do fractional banking too, and by that reasoning is more robust than a bank. Why would you specifically trust Tether with your money?
I would trust a random individual more than a bank. There is a chance that the random individual might be honest... On the other hand, I know for sure that banks are running a pyramid scheme.
We used to have private banks 100 years ago, and people would lose their money on a run on the bank. Central banks were created to have a shared liquidity pool so you are all safe in your deposits. Not just a private company that issues money and can run away with it all