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I suppose they held their own against Sauron but it's of course possible they were destroyed,enslaved (to the slavelands of Rhun perhaps?) or tricked into Saurons service,lured by promises of riches and wealth.
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It is said somewhere (I can't remember where) that during the Battle of the Last Alliance all creatures except the elves where on both sides that day, and among the dwarves those of Durin's house fought with the Alliance. Doesn't this indicate that there were at least some dwarves at Sauron's side?