Erebor Cancels Free Stablecoin Redemption Service, Wintermute and Other Institutions Had Exploited It for Arbitrage

Odaily reports: Erebor Bank, a crypto-friendly bank founded by Palmer Luckey, launched free withdrawal services for Circle and Tether stablecoins this year to attract crypto clients. Professional trading firms such as Wintermute exploited the arbitrage opportunities within, causing losses for the bank, and the service was discontinued after several months of operation.

Stablecoins do not always trade at exactly $1; redemption fees, liquidity differences, and depeg risks can all cause price deviations.