Kraken Suspends Monero Deposits After 51% Blockchain Attack Linked to Qubic Mining Pool

In a dramatic turn of events for the cryptocurrency sector, leading U.S.-based exchange Kraken has temporarily suspended deposits of Monero (XMR) following a serious 51% attack on the privacy-focused blockchain. The decision came after one mining pool, Qubic, gained control of more than half of Monero’s total hashpower, raising concerns about the network’s long-term security and stability.

The move has shaken both Monero users and the wider crypto industry, reigniting debates over the vulnerability of proof-of-work blockchains to mining centralization and the unique risks that privacy coins face in the global digital asset landscape.

Why Kraken Halted Monero Deposits

Kraken explained that while Monero trading and withdrawals remain active, deposits have been suspended indefinitely as a protective measure against potential fraud and double-spending. When a single mining pool or entity controls more than 50% of the network’s computational power, it can reorganize the blockchain by rewriting blocks, invalidating transactions, and potentially creating conflicting transaction histories.

Source: X

According to security firm SlowMist, the attack led to six blocks being reorganized and nearly 60 blocks becoming orphaned—meaning they were effectively erased from the chain’s transaction history. This not only undermined transaction reliability but also opened the door to malicious behavior, such as blocking transactions or attempting double-spends.

“Deposits are unsafe while the network is under attack,” Kraken said in a statement. “We will resume deposits only once the network is stable and secure again.”

How the Attack Was Detected

The unusual activity was first identified by SlowMist, a blockchain security company that closely monitors proof-of-work networks. Charles Guillemet, Chief Technology Officer of Ledger, later confirmed the nature of the attack and warned that Qubic had been gradually building its mining power for months.

Reports suggest that controlling Monero’s network at this scale could cost approximately $75 million per day in electricity and equipment—an enormous sum for most mining pools. What stunned many in the community was that Qubic, a comparatively small project with a market capitalization of just $377 million, managed to outmuscle Monero, which boasts a market cap of around $4.87 billion.

“It shows how fragile even well-established blockchains can be if mining centralization is not addressed,” one analyst told ABC News.

The Impact on Monero and Its Community

The incident struck at the heart of Monero’s reputation. Often dubbed the “king of privacy coins,” Monero is widely known for its ability to obscure the identities of senders and receivers while concealing transaction amounts. This anonymity, however, comes at a cost: it makes it more difficult to track the distribution of mining power across the network, inadvertently increasing the risk of centralization.

Community members expressed frustration not only with the attack but also with what they saw as a muted response from Monero’s developers. Some users criticized the lack of clear communication during the crisis, with one calling the developer silence “pathetic.” Others argued that without stronger transparency, trust in the project could be permanently damaged.

Source: CMC

Despite these challenges, Monero’s price showed remarkable resilience. Following the initial sell-off that saw XMR fall 14% on the day of the attack, the token later recovered and is now trading at $264.13, representing an 11.51% increase in the past 24 hours, according to CoinMarketCap data. Still, the episode has raised tough questions about whether Monero—and privacy coins in general—can withstand future assaults.

Broader Lessons for the Crypto Sector

The Monero attack is not the first instance of a 51% assault on a blockchain, but it is among the most high-profile. Traditionally, smaller or lesser-known cryptocurrencies have borne the brunt of such attacks because their lower network hashpower makes them easier to manipulate. Monero’s global recognition, longevity, and multi-billion-dollar market cap made this event a wake-up call for the entire industry.

Experts point to the fundamental risks posed by mining centralization. While proof-of-work systems were designed to distribute control among miners worldwide, market dynamics, energy costs, and the concentration of mining hardware have increasingly funneled power into the hands of a few large pools. When this happens, the decentralized ethos of blockchain can quickly erode.

“This was a clear demonstration of how mining monopolies undermine blockchain security,” said Guillemet. “If one pool can control the chain, then the integrity of the entire system is at risk.”

Regulatory Pressure on Privacy Coins

The timing of the Monero attack comes at a sensitive moment for privacy coins. Governments and regulators worldwide have already intensified scrutiny of tokens like Monero, Zcash, and Dash, citing their use in money laundering, ransomware payments, and other illicit activities.

For regulators, the attack highlights both the strengths and weaknesses of privacy coins. On one hand, Monero’s anonymity features remain highly effective at shielding user data. On the other, the inability to monitor mining distribution makes these coins potentially more susceptible to network manipulation.

“Privacy coins are already under the microscope for their role in concealing transactions,” said a former U.S. Treasury official. “When security incidents like this occur, it gives regulators even more ammunition to push for stricter oversight or outright bans.”

What Comes Next for Monero

For now, Kraken has not given a timeline for when Monero deposits will resume, stressing that the network must first demonstrate sustained stability. Analysts recommend that users confirm transactions with multiple block confirmations to mitigate risk in the short term.

The Monero development team, meanwhile, is facing mounting pressure to address both technical and communication gaps. Proposals circulating in the community include:

• Introducing stronger safeguards against mining centralization.

• Enhancing monitoring tools to detect irregular mining activity earlier.

• Improving communication protocols during network crises.

Whether these steps will be enough to restore confidence remains uncertain.

A Warning Sign for Other Blockchains

Perhaps the most significant takeaway from the Monero attack is its broader implication: no blockchain, no matter how established or reputable, is entirely immune from a 51% attack. While Monero has long been considered a robust privacy solution, this incident shows that even networks with strong use cases can falter if mining power becomes concentrated.

The attack also underscores a growing tension in the crypto industry between scalability, decentralization, and security. Smaller proof-of-work blockchains, in particular, may find themselves vulnerable as mining economics evolve and larger players consolidate their dominance.

Conclusion

The suspension of Monero deposits on Kraken may be a temporary measure, but the questions it raises are anything but. For Monero, the challenge is not only technical but also reputational: how can a privacy coin maintain trust in an environment where transparency is limited by design? For the broader cryptocurrency ecosystem, the attack is a reminder that decentralization is not guaranteed but must be constantly defended.

As regulators increase pressure on privacy coins and centralized mining pools continue to grow in influence, the Monero episode may be remembered as a pivotal moment in the ongoing struggle to balance privacy, security, and trust in blockchain technology.

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