Kraken Pauses Monero Deposits as Qubic Claims 51% Network Control

Kraken has temporarily suspended Monero (XMR) deposits following reports that Qubic, a layer-1 blockchain and mining pool focused on AI applications, claimed to have seized control of over 50% of the Monero network’s hashing power. This move signals heightened security concerns as a single mining pool’s dominance raises the risk of potential 51% attacks, which can allow an entity to manipulate transaction ordering or facilitate double-spending [1].

The attack, if confirmed, would represent a rare and significant breach of a major cryptocurrency’s network security. Monero, a privacy-focused cryptocurrency ranked 29th by market capitalization at approximately $6 billion, has been a target in a months-long struggle between Qubic and other mining pools. Qubic initially faced a setback in early August when a distributed denial of service (DDoS) attack reduced its hashrate from 2.6 gigahashes per second (GH/s) to 0.8 GH/s. However, the mining pool later regained strength and claimed to have achieved majority control of the network [1].

Kraken’s announcement emphasized the potential threat to network integrity, stating, “As a security precaution, we have paused Monero deposits after detecting that a single mining pool has gained more than 50% of the network’s total hashing power.” The exchange cited the vulnerability of proof-of-work blockchains with concentrated mining power as the reason for its decision [1].

Qubic’s actions have sparked controversy within the Monero community. While the mining pool asserts it has successfully taken control of the network, Monero developers have pushed back. Luke Parker, a lead developer at SeraiDEX, disputed the claim, stating that a six-block reorganization does not necessarily confirm a successful 51% attack. Parker explained that such an event could also be the result of an adversary with significant hashing power “getting lucky” [1].

Zhong Chenming, co-founder of cybersecurity firm SlowMist, however, took a more cautious stance, stating the attack “seems to have succeeded,” and warned that Qubic could now theoretically rewrite the blockchain and censor transactions [1]. The Qubic pool’s strategy reportedly included rejecting blocks from rival mining operations to consolidate its control.

The incident highlights a persistent vulnerability in proof-of-work blockchains where mining power is not widely distributed. A 51% attack occurs when one party controls the majority of a blockchain’s mining power, enabling them to alter the chain’s history or block transactions [1].

The confrontation between Qubic and the Monero network began in late June, when Qubic redirected its proof-of-work model—typically used for AI-related tasks—toward Monero mining. The mined XMR was intended to fund Qubic token buybacks and burns, creating an economic incentive to overpower the network [1].

The broader crypto industry is watching the situation closely, as it underscores the importance of decentralized mining and network resilience. Kraken’s decision to halt Monero deposits reflects a growing caution among major exchanges regarding the security of proof-of-work blockchains in the face of increasingly sophisticated attacks [1].

Source: [1] Kraken Halts Monero Deposits Amid 51% Attack on Blockchain (https://cryptonews.com/news/kraken-halts-monero-deposits-amid-51-attack-on-blockchain/)