The definitive answer is...we're not sure.
There are two versions. One is that Sauron gave the Rings to the Dwarves himself, the other is that the Elf-smiths gave out the Rings. It's the usual case of Dwarf-said, Elf-said.
The more accepted view seems to be that Sauron took the Rings and gave them out himself.
As to how, well, he hadn't lost his power to assume fair shapes yet...
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...finding a path that cannot be found, walking a road that cannot be seen, climbing a ladder that was never placed, or reading a paragraph that has no...
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