Ótr, who often assumed the form of an otter was killed by Loki, and when Hreiðmarr learned of his son's death, he and his sons captured Loki and his companions Odin and Hœnir. The three Æsir offered Hreiðmarr ransom for their lives. It was agreed to fill Ótr's skin with gold, and Odin sent Loki to the land of the Black Elves to procure the gold. There he came upon the dwelling of a dwarf called Andvari and forced him hand over all his gold. The dwarf attempted to withhold one small ring, but Loki made him give it up as well, which the dwarf did with a curse, saying that the ring should be the ruin of every one who should come into possession of it. The Æsir used the gold to fill the otter's skin, and then to cover it. Hreiðmarr looked at it searchingly and saw one of the hairs of the snout, and commanded that this be covered. Odin drew the dwarf's ring, which was called Andvaranaut, and covered the hair, saying they were now delivered from their debt for the slaying of the otter.
Before they left, Loki declared that the dwarf's curse should be fulfilled: that this ring and this gold should be the destruction of him who received it; and this soon came to pass.
Fáfnir and Reginn demanded their share of the gold, but Hreiðmarr refused, whereupon Fáfnir stabbed his father with a sword while sleeping. Hreiðmarr called out to his daughters Lyngheiðr and Lofnheiðr to avenge their brother's crime, and then died. Fáfnir took all the gold and fled with it to Gnitaheið, where he turned himself into serpent and laid down on the treasure. He also took the helmet his father had possessed, and which was called the Helm of Terror, and the sword called Hrotti.
- Sigurðarkviða Fáfnisbana II.
- Skáldskaparmál, 39-40.