Kraken Halts Monero Deposits as Qubic Gains 51% Network Control

Kraken, a leading crypto exchange company, has halted all Monero (XMR) deposits. The decision was made after the firm detected that a single mining pool called Qubic had gained majority control of the network’s hashrate. This has increased the concerns over a potential 51% attack on the privacy-focused blockchain.

The announcement was made by Kraken, in which the company confirmed that it had paused all Monero deposits as a security precaution after it discovered that Qubic now has command over more than half of the privacy-focused blockchain’s hashing power. Kraken cited the risk of double-spending attacks, where an attacker can reverse confirmed transactions, as the key reason for the suspension.

Qubic, an AI-driven blockchain and mining pool, publicly declared earlier this week that it had achieved 51% dominance over Monero following what it described as a “month-long, high-stakes technical confrontation.” Representatives said the pool had successfully reorganized the blockchain, strengthening its control.

Initially, Monero community members downplayed the claims. However, updated mining pool statistics confirm Qubic’s dominance, placing it as the top Monero miner.

The takeover attempt was not without resistance. On August 4, Qubic was hit by a denial-of-service (DDoS) attack that slashed its hashrate from 2.6 gigahashes per second to just 0.8 GH/s. The attack briefly dropped the pool to seventh rank among Monero miners. Even though this setback happened, Qubic rapidly bounced back, regaining its processing power and taking control of the network again.

Sergey Ivancheglo, who has been associated with high-profile blockchain projects in the past, said he was in charge of the 51% attack, which raised even more questions about the integrity of the Monero network.

Kraken’s suspension of deposits is designed to protect user funds while the network remains compromised. Analysts say that other crypto exchanges might do the same thing until Monero's mining power distribution returns to normal.

A successful 51% assault lets attackers reorganize blocks, block transactions, and double-spend, which is a huge danger to exchange platforms that handle a lot of transactions.

The Monero event shows that proof-of-work consensus mechanisms have been risky for a long time because network security depends on how processing power is spread out. Now that Qubic is in charge, many are still wondering how strong Monero is and how safe privacy-focused cryptocurrencies are in general.