Kraken Halts Monero Deposits Amid 51 Percent Attack Fears and Network Turmoil

Kraken Suspends Monero (XMR) Deposits Following 51% Attack Concerns

The cryptocurrency exchange Kraken has temporarily suspended deposits for Monero (XMR) due to a potential 51% attack on the privacy-focused blockchain. While withdrawals and trading of Monero remain active on Kraken, the suspension of deposits was implemented as a precautionary measure to protect network integrity. According to Cointelegraph: Bitcoin & Krypto-Nachrichten, the Monero blockchain is currently facing a significant security threat, as a mining pool named Qubic claimed to have gained majority control over the network's hash rate and successfully reorganized six blocks. This claim, however, was met with denials from the Monero community regarding the nature of the attack.

A 51% attack occurs when a single mining pool controls more than half of a blockchain network's total hash power, enabling it to double-spend and reorder transactions. Qubic, a Layer-1 blockchain and AI-focused mining pool, asserted that after a month-long confrontation, it reached 51% of Monero's hash rate and managed to reorganize the blockchain. The pool was initially pushed back to the seventh position among Monero mining pools and subsequently suffered a DDoS attack on August 4, which reduced its hash rate from 2.6 GH/s to 0.8 GH/s. Despite this, Qubic regained its full hash power and now controls a significant portion of Monero's computational resources.

Qubic representatives highlighted the significance of this event, describing it as a pivotal moment in the crypto industry, with a $6 billion blockchain protocol being overtaken by a $300 million AI protocol. The Monero community has been shaken by the ongoing attack, which has sparked widespread reactions and debates about the security of privacy coins and mid-sized proof-of-work blockchains.

• Kraken suspended Monero deposits as a security measure after a single mining pool exceeded 50% of the network's hash rate.
• Trading and withdrawals for XMR on Kraken remain unaffected.
• The attack led to the reorganization of six blocks and the orphaning of approximately 60 blocks.
• Monero's privacy features, which obscure sender, receiver, and transaction amounts, make it a preferred choice for users seeking anonymity but also expose it to unique security risks.

"As a precautionary measure, we have suspended Monero (XMR) deposits after determining that a single mining pool has reached more than 50% of the network's total hash rate. This concentration of mining power poses a potential risk to the integrity of the network. We are actively monitoring the situation and will resume deposits once we determine it is safe to do so. Trading and withdrawals for XMR continue to function without restriction." – Kraken statement, as reported by CryptoDnes.bg and Cryptopolitan.

Qubic's approach did not rely on traditional malicious attacks but instead leveraged economic incentives to attract miners from distributed pools to its centralized operation. The pool introduced a "useful Proof-of-Work" (uPoW) module, converting mined XMR into USDT stablecoins to purchase and burn QUBIC tokens, reinforcing the deflationary nature of its native currency. This model represents a new form of control, focusing less on sabotage and more on creating economic incentives that pressure Monero's decentralization.

Despite Monero's use of the RandomX algorithm to prevent ASIC mining and favor CPU and GPU mining, Qubic's strategy managed to overcome these defenses. The incident has raised fresh concerns about the vulnerability of privacy coins to majority attacks, especially those with lower hash rates compared to leading blockchains like Bitcoin and Ethereum.

Monero, which was launched in 2014, remains one of the top privacy coins and is currently ranked among the top 30 digital assets by market capitalization. However, the recent events have placed its security model under intense scrutiny, with its value dropping by nearly 25% in the past month, making it one of the three worst-performing major cryptocurrencies during this period, as reported by PortalCripto.

• Qubic's DDoS attack reduced its hash rate from 2.6 GH/s to 0.8 GH/s, but the pool quickly recovered and reasserted dominance.
• The Monero community and industry observers are calling for urgent security reviews and potential protocol adjustments to prevent future attacks.
• The incident has reignited debates about the long-term viability and security of privacy-focused cryptocurrencies.

Summary Box:

• Kraken suspended Monero deposits after Qubic controlled over 50% of the network's hash rate and reorganized six blocks.
• Monero's value fell by about 25% in the last month, with its market cap estimated at $6 billion.
• The attack highlighted the risks of hash rate centralization and the need for enhanced security in privacy coins.
• Sources: Cointelegraph: Bitcoin & Krypto-Nachrichten, CryptoDnes.bg, Cryptopolitan, PortalCripto.

Sources:

• Kraken stoppt Einzahlungen für Monero (XMR) wegen 51-Prozent-Attacke
• Kraken pausiert Monero-Einzahlungen, nachdem Qubic-Mining-Pool die Mehrheit der Hash-Rate gewinnt
• Kraken setzt Monero-Einzahlungen nach 51%-Angriff im Zusammenhang mit Qubic Pool aus
• Kraken stoppt Monero-Einzahlungen, da Qubic 51 % der Hashrate beschlagnahmt
• Kraken friert Monero-Einzahlungen ein, nachdem Qubic mit Netzwerksdominanz prahlt
• Kraken setzt Monero-Einzahlungen aus, nachdem Qubic die Hashrate kontrolliert