Kraken has halted deposits of Monero (XMR) following a 51% attack on the privacy-focused blockchain, a move the exchange says was necessary to safeguard users.
In a statement on Friday, Kraken explained the decision, saying: “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. This concentration of mining power poses a potential risk to network integrity.”
A 51% attack occurs when one entity or mining pool controls the majority of a blockchain’s computing power. This allows the group to potentially reorder transactions, double-spend tokens, and compromise the reliability of the ledger.
Qubic Declares Control Over Network
The attack centers on Qubic, a layer-1 AI-oriented blockchain and mining pool, which announced earlier in the week that it had reached majority control of Monero’s hashrate. Qubic claimed responsibility for reorganizing six blocks, which sparked heated denials from within the Monero community.
“After a month-long, high-stakes technical confrontation, Qubic reached 51% of Monero’s hashrate dominance, successfully reorganizing the blockchain,” Qubic spokespeople said on Tuesday.
Initially, Qubic struggled to gain dominance. At one point, it was only Monero’s seventh-largest miner. Reports also suggest that the pool was targeted by a denial of service attack on August 4, which temporarily slashed its hashrate.
Impact of Cyberattacks on Mining Pools
The DDoS attack, which overwhelms systems by flooding them with false traffic, cut Qubic’s hashrate from 2.6 gigahashes per second (GH/s) down to 0.8 GH/s. Despite this, the pool later recovered and regained strength.
According to Sergey Ivancheglo, who claimed responsibility for leading the takeover, Qubic’s resurgence allowed it to establish majority control, securing a decisive position on the Monero network.
Qubic spokespeople framed the development as a milestone for both AI and Crypto industries, calling it “a pivotal moment in the crypto industry,” as a $300 million AI-focused project asserted dominance over a $6 billion privacy network.
Shockwaves in the Privacy Coin Community
Monero, the 29th largest cryptocurrency by market capitalization, has long been regarded as a leading privacy-preserving protocol. Its reliance on anonymity and security features has built a loyal user base.
The attack has unsettled this community, which views decentralization as a cornerstone of Monero’s value proposition. For now, exchanges like Kraken are taking extra precautions to prevent user losses and maintain trust.