The prison island of Dreadhold rests off the northern ranges of Cape Far. It was first established by Karrn the Conqueror as a place for exiling overthrown rulers or aristocrats who have fallen from favor, it was eventually converted by the early Galifar kings into an almost inescapable prison for those too important to execute and too dangerous to be left free. The dwarves of House Kundarak maintain the prison, which houses the most dangerous criminals from across the continent, including numerous war prisoners sent here for wartime atrocities. Most of the dwarves consider a tour of duty at Dreadhold to be equivalent to exile, but the bearers of the Mark of Warding make sure the prison stays secure despite the drabness of the place. Rumors persist that an important prisoner from Karrnath is imprisoned here, and that the dwarves use the prisoners to mine Khyber dragon shards from deep chasms beneath the island.
(Source: Eberron Campaign Setting p. 187)