[Crypto-Friendly Bank Erebor Cancels Free Stablecoin Redemption, Exploited by Institutions Like Wintermute] According to a report by The Information, Erebor Bank, a crypto-friendly bank founded by Palmer Luckey, launched a service earlier this year offering free redemption of Circle and Tether stablecoins into cash to attract crypto clients. However, professional trading institutions like Wintermute identified arbitrage opportunities within the service and exploited them, causing losses for the bank. The service was discontinued after a few months. The report noted that stablecoins do not always maintain a $1 value in actual transactions, with redemption fees, liquidity discrepancies, and de-pegging risks causing deviations. This poses challenges for a new wave of banks attempting to treat stablecoins as equivalent to cash.