Do you have a source for that? It seems like it would generally be in Coinbase and Circle's best interest for people to arb USDC (at times when redemptions are live).

You mean trading assets for other assets to turn a profit, literally the entire point of Coinbase Pro?

No, I don't mean that. CBP is fine for them, since they earn fees on it.

If you pull your funds off CB into a DEX and then do the arbitrage, that's when they get unhappy.

Yes, that's happened to someone I know. Their account was locked as soon as CB figured out that is what they were being used for. They don't like just being a fiat ramp since it doesn't earn them anything.