Kraken Pauses Monero Deposits After Qubic 51% Attack

Kraken has temporarily suspended Monero (XMR) deposits following a confirmed 51% attack on the network, a move the exchange described as a precautionary measure to protect user funds and network integrity. The attack, executed by the Qubic mining pool, allowed it to briefly control more than 50% of Monero’s hashrate, enabling the reorganization of six blocks and the orphaning of approximately 60 blocks [2]. Kraken announced the suspension, stating, “As a security precaution, we have paused Monero (XMR) deposits after detecting that a single mining pool has gained more than 50% of the network’s total hashing power. This concentration of mining power poses a potential risk to network integrity.” The exchange added that trading and withdrawals for XMR remain operational and that it will resume deposits once it determines the network is secure [2].

Monero, which is widely regarded for its strong privacy features—hiding sender, receiver, and transaction amounts—has seen its security model challenged by the attack. Despite being the 29th largest cryptocurrency by market capitalization, Monero’s relatively smaller hashrate compared to larger blockchains has made it more vulnerable to majority control by a single mining entity [2]. The Qubic pool, a layer-1 AI-focused blockchain, claimed to have reached 51% hashrate dominance and executed the reorganization, while the Monero community initially denied the attack [2]. However, the event has underscored the inherent risks in proof-of-work blockchains where mining power is not sufficiently distributed [2].

The Qubic attack followed a contentious period marked by a denial-of-service (DDoS) attack on August 4, which drastically reduced the pool’s hashrate from 2.6 gigahashes per second (GH/s) to 0.8 GH/s. Despite this setback, Qubic eventually regained its hashing power and achieved control over the network [2]. Sergey Ivancheglo, an individual associated with the attack, confirmed the incident, highlighting the vulnerability of mid-sized blockchains to such exploits [2]. While no confirmed theft or fraud was reported on Kraken, the incident has raised concerns among users and industry observers about the balance between privacy and security in cryptocurrency networks [2].

Kraken’s response reflects a growing awareness among crypto exchanges of the risks posed by concentrated mining power in smaller blockchains. The exchange emphasized its commitment to user security and transparency, stating it would closely monitor the situation and resume XMR deposits once the threat has been mitigated [2]. The incident also highlights the need for stronger consensus mechanisms and broader mining participation to reduce the likelihood of future 51% attacks [2].

Monero’s community is now faced with the challenge of addressing the network’s structural weaknesses, particularly in the context of an increasingly competitive and evolving mining landscape. The attack has prompted renewed discussions on the viability of privacy-first blockchains and the measures required to ensure their long-term security [2].

Source:

[1] Cointelegraph

https://cointelegraph.com/news/kraken-pause-monero-deposits-after-51-attack

[2] CryptoDnes.bg

https://cryptodnes.bg/en/kraken-suspends-monero-deposits-after-51-attack-linked-to-qubic-pool/