Kraken suspends Monero deposits after 51% attack exposes network vulnerability

Kraken has temporarily suspended Monero (XMR) deposits following a confirmed 51% attack on the privacy-focused blockchain, which compromises the network’s transaction integrity. The exchange stated the decision is a security precaution, noting that a single mining pool has gained control of over 50% of the network’s hashrate [1]. The move does not affect Monero trading or withdrawals, which remain fully operational [1].

A 51% attack occurs when a single entity or group controls more than half of a blockchain’s mining power, enabling it to manipulate transaction validation and potentially double-spend coins. In this case, the Qubic mining pool reportedly reorganized six blocks on the Monero blockchain, rewriting parts of the transaction history [2]. The attack raised concerns about the vulnerability of mid-sized Proof-of-Work blockchains with less distributed mining power [2].

Qubic, a layer-1 AI-focused blockchain and mining pool, claimed it had gained control of the majority of Monero’s hashrate, though the mining pool had initially faced resistance. On August 4, it was allegedly hit with a denial-of-service (DDoS) attack, which temporarily reduced its hashrate from 2.6 gigahashes per second (GH/s) to 0.8 GH/s. However, Qubic later regained its hashing power and eventually controlled more than 50% of the network [2].

Monero, launched in 2014 and ranked as the 29th largest cryptocurrency by market capitalization according to CoinMarketCap, is known for its strong anonymity features, including confidential addresses and transaction amounts. However, the same attributes have also made it a target for mining centralization issues, as its hashrate is significantly smaller compared to larger blockchains [2].

Kraken has indicated that Monero deposits will resume once it determines the network is secure enough to support safe transactions. In the interim, users can still trade and withdraw Monero without restrictions [1].

The incident has sparked renewed calls for improved decentralization and security measures within the Monero community. Privacy advocates have highlighted the importance of mitigating the risks associated with concentrated mining power to protect the integrity of the network [3]. The broader cryptocurrency industry is now closely monitoring how Monero responds to this challenge and whether similar vulnerabilities could affect other smaller blockchains.

Source: [1] Kraken pauses Monero deposits following 51% attack (https://cointelegraph.com/news/kraken-pause-monero-deposits-after-51-attack)

[2] Kraken Suspends Monero Deposits After 51% Attack ... (https://cryptodnes.bg/en/kraken-suspends-monero-deposits-after-51-attack-linked-to-qubic-pool/)

[3] Crypto Short News – Latest Real-Time Updates (https://coinpedia.org/crypto-live-news/)