Kraken Halts Monero Deposits as Qubic Seizes 51% Hashrate

Kraken has temporarily halted Monero (XMR) deposits following a brief but concerning spike in hashrate control by a single mining entity, Qubic, which reportedly seized more than 50% of the network’s computational power. The exchange cited the potential for a 51% attack as a justification for the precautionary move, which aims to protect user funds and uphold network integrity. According to Kraken’s statement, the freeze will remain in place until the network updates to a block with less than 50% hashrate held by any single entity [1].

The incident, which saw the reorganization of six Monero blocks, has raised questions about the network’s resilience and the broader vulnerabilities of smaller proof-of-work blockchains. Qubic, a mining pool associated with a different blockchain project, claimed the activity was a “stress test” rather than a malicious attack. However, it reportedly included the burning of XMR rewards as part of the process [2]. Monero developers have expressed concern that such events—regardless of intent—challenge the decentralized nature of the network and expose potential security flaws.

A 51% attack enables an actor to manipulate the blockchain by invalidating transactions, double-spending coins, or blocking new transactions. For Monero, a privacy coin designed to provide untraceable transactions, the perceived vulnerability has intensified scrutiny around its mining distribution and overall network stability [3]. Kraken’s decision highlights the broader risks of mining centralization and the delicate balance exchanges must maintain between security and user accessibility.

The exchange has clarified that while deposits are frozen, Monero withdrawals and trading remain unaffected. This allows users to retain access to their assets during the pause. Kraken emphasized its commitment to transparency and regularly updating its status page to keep users informed of developments. The exchange also noted its intention to collaborate with the Monero community to assess and address the situation [4].

The timing of the incident has sparked renewed interest in blockchain projects that prioritize decentralization and network resilience. Investors are now scrutinizing alternative cryptocurrencies and infrastructure innovations that aim to mitigate the risks associated with hash rate concentration [5]. The event also underscores the importance of robust governance and transparent mining practices in the crypto space, particularly for privacy-focused assets like Monero.

While Kraken has not indicated a timeline for resuming Monero deposits, it has advised users to monitor updates from both the exchange and Monero developers. The pause is expected to remain in place until a thorough evaluation of the network’s security is completed. In the meantime, the situation serves as a reminder of the ongoing challenges in maintaining the integrity of blockchain networks [6].

Kraken’s action aligns with its broader commitment to user security and proactive risk management. The exchange has a history of implementing measures to safeguard digital assets and responding swiftly to emerging threats. This response is consistent with its approach to balancing user protection with operational continuity in the face of unpredictable network dynamics [7].

The incident highlights the fragility of smaller blockchain networks when mining power becomes concentrated. While larger blockchains such as Bitcoin and Ethereum are less susceptible to 51% attacks, projects with lower hashrate and limited mining participation remain vulnerable. The event could prompt greater industry-wide attention to solutions that enhance decentralization and network security [8].

Source:

[1] https://www.ainvest.com/news/kraken-halts-monero-deposits-51-mining-pool-dominance-concerns-2508/

[2] https://web.ourcryptotalk.com/news/kraken-suspends-monero-51-percent-attack

[3] https://bravenewcoin.com/partner/top-altcoins-to-buy-after-kraken-halts-monero-deposits

[4] https://cryptobriefing.com/monero-51-attack-kraken-halts-deposits/

[5] https://www.msn.com/en-us/money/markets/kraken-halts-monero-deposits-as-qubic-seizes-51-hashrate/ar-AA1KEALn

[6] https://cryptonews.com/news/kraken-halts-monero-deposits-amid-51-attack-on-blockchain/

[7] https://tradersunion.com/news/cryptocurrency-news/show/440227-kraken-pauses-monero-deposits

[8] https://financefeeds.com/kraken-pauses-monero-deposits-after-miner-seizes-majority-control/