I see your point but I'm having a hard time figuring out how Tether is anyway different from FTX?

Both require trusting someone else and both have off chain components to how they work, it seems like a distinction without a difference here.

Can you add more colour as to how those are different because I can easily see how they are very similar?

I think the difference between traditional finance and FTX is the oversite piece and the separation of duties piece.

Traditional finance places a large roll on oversite and compliance to the point where people complain about all the rules and regulations that have been built up to protect people, and to be fair to allow government oversite.

FTX had no oversite and therefor its hard to lump it into traditional finance as compliance and oversite are bedrock must have pieces of traditional finance.

Also as was my main point, traditional finance requires separation of duties, given that FTX had none of these, its very hard to call it traditional finance without destroying the meaning of the term or watering it down so much that its meaningless.