Kraken suspends Monero deposits after 51% attack by Qubic
On August 15, the cryptocurrency exchange Kraken announced a temporary suspension of Monero (XMR) deposits. The reason cited was an acute threat to network stability due to an ongoing 51% attack. In such an attack, a single actor or mining pool gains control of more than half of a blockchain’s total hashrate, enabling them to censor transactions, double-spend, or rewrite blocks retroactively.
The attack has been claimed by Qubic, a project led by Sergey Ivancheglo, co-founder of IOTA. On August 12, Qubic stated that it had secured a majority of Monero’s hashrate through its mining pool, utilizing a mechanism called Useful Proof-of-Work (uPoW or UPoW). Qubic’s approach is particularly controversial: the XMR mining rewards generated by the attack are not held, but half are exchanged for USDT to buy back and burn QUBIC tokens. This strategy is intended to redirect the utility of Monero mining into Qubic’s own token economy, but in practice, it undermines the integrity of the Monero network.
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Reports on X (formerly Twitter) indicate that there has already been a reorganization of six blocks on the Monero blockchain, supporting Qubic’s claim of control. This confirms that a single pool can at least temporarily influence the network’s transaction history.
Kraken responded by stating it is closely monitoring the situation and will resume deposits once network security is assured. Trading and withdrawals of XMR remain fully functional. The exchange explicitly warned of the risks: such a high degree of hashrate centralization threatens the fundamental decentralization and integrity of the blockchain. Theoretically, Qubic could now censor transactions, perform double-spends, or manipulate block history—scenarios that are particularly dangerous for Monero as a privacy coin.
- Qubic claims to control the majority of Monero’s hashrate using uPoW.
- Six-block reorganization on Monero blockchain reported.
- Kraken suspends XMR deposits but keeps trading and withdrawals open.
- Half of the mined XMR is converted to USDT to buy back and burn QUBIC tokens.
- Kraken warns of risks to decentralization and network integrity.
The attack on Monero is part of a series of incidents highlighting the vulnerability of even major blockchains. While 51% attacks have long been theoretically possible, they are rare in practice due to the immense hashrate required. Qubic’s ability to claim such control is a warning sign: even networks with strong reputations in the privacy sector are not immune to mining centralization effects. For exchanges like Kraken, this means prioritizing risk management over network security in the short term. For users, it underscores that even established privacy coins do not offer absolute protection against technical attacks.
| Date | Event | Details |
|---|---|---|
| August 12, 2025 | Qubic claims majority hashrate | Uses uPoW, starts converting XMR to USDT for QUBIC buyback and burn |
| August 15, 2025 | Kraken suspends XMR deposits | Ongoing 51% attack, trading and withdrawals remain open |
| Reported on X | Six-block reorganization | Confirms Qubic’s temporary control over Monero blockchain |
Infobox: According to coin-update.de, Kraken has suspended Monero deposits due to a 51% attack by Qubic, which claims to control the majority of Monero’s hashrate and is using mining rewards to buy back and burn its own tokens. The incident highlights the risks of mining centralization, even for established privacy coins.
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