Kraken suspends Monero deposits after Qubic 51% attack exposes network vulnerability

Kraken has temporarily suspended Monero (XMR) deposits following a reported 51% attack on the privacy-focused cryptocurrency’s network. The exchange stated that a single mining pool, Qubic, had accumulated over 50% of Monero’s total hashing power, creating a potential risk to the network’s integrity [1]. In a public statement, Kraken emphasized that the precautionary measure was taken to protect users while the situation is being closely monitored [2].

The 51% attack allows an entity with majority hashrate control to reorder transactions, double-spend tokens, and alter the blockchain’s history, undermining trust in the network. According to Qubic, the mining pool was able to reorganize the blockchain by six blocks, orphaning approximately 60 blocks in the process [3]. The development has raised broader concerns about the vulnerability of smaller, privacy-centric blockchains like Monero, which operates with a significantly lower hashrate than major Proof-of-Work networks like Bitcoin or Ethereum [4].

The path to dominance for Qubic was not immediate. Initially, the pool ranked as Monero’s seventh-largest miner. However, it faced a significant setback on August 4, when a denial-of-service attack drastically reduced its hashrate from 2.6 gigahashes per second (GH/s) to 0.8 GH/s. Despite this, Qubic later recovered and regained enough power to achieve majority control, a feat described by the pool’s spokesperson as a pivotal moment in the crypto industry [5].

Monero, the 29th largest cryptocurrency by market capitalization, has long been valued for its robust privacy features, which obscure sender, receiver, and transaction amounts. The recent attack has, however, exposed a critical weakness in its network: the concentration of mining power can lead to centralization and manipulation, contradicting the principles of decentralization that many in the crypto community uphold [6]. As a result, the incident has sparked concern within the privacy coin community, which views decentralization as fundamental to the value proposition of cryptocurrencies like Monero [7].

The market responded quickly, with Monero’s price falling by as much as 14% in the wake of the attack [8]. Kraken has not yet provided a timeline for resuming XMR deposits but has affirmed that trading and withdrawal functions remain operational. The exchange has framed its decision as a calculated risk assessment, rather than a permanent withdrawal from the asset [9]. This incident is likely to prompt further scrutiny of similar blockchains and may lead to the implementation of enhanced security measures across the exchange industry [10].

The broader implications of this event highlight the ongoing challenge of balancing privacy, decentralization, and network security in the evolving cryptocurrency landscape. While privacy coins offer essential anonymity to users, their smaller hashrates make them more susceptible to attacks when mining power is not adequately distributed [11]. As the situation unfolds, Kraken’s response serves as a cautionary example of how exchanges may act proactively to safeguard user assets in the face of emerging security threats [12].

Source: [1]title1.............................(https://cryptoslate.com/kraken-suspends-monero-deposits-after-51-attack/)

[2]title2.............................(https://www.ainvest.com/news/kraken-halts-monero-deposits-qubic-51-attack-exposes-network-vulnerability-2508/)

[3]title3.............................(https://cryptodnes.bg/en/kraken-suspends-monero-deposits-after-51-attack-linked-to-qubic-pool/)

[6]title6.............................(https://app.eventaware.ai/app/event/572e54ab-77ee-42ad-be97-d8a5b95bd64b)

[7]title7.............................(https://tradersunion.com/news/cryptocurrency-news/show/440227-kraken-pauses-monero-deposits/)