Crypto exchange Kraken has announced a temporary stoppage of Monero (XMR) token deposits on its platform. This move comes in response to the ongoing 51% attack against the Monero blockchain, an open-source protocol and privacy-focused network.
For context, a 51% attack refers to a situation where a group of miners gains more than 50% of a blockchain’s mining hash rate. On Tuesday, August 12, Qubic, a project led by IOTA co-founder Sergey Ivancheglo, claimed that it has seized control of the majority of the Monero blockchain’s hash rate.
According to the Qubic mining pool, the 51% attack was executed using a useful proof-of-work (uPoW or UPoW) mechanism. As reported on Bitcoinist, the Qubic team is taking half the mining profits in XMR, converting them into USDT to buy QUBIC tokens, and then sending them to a burn address.
Why Did Kraken Suspend Monero Deposits On Its Platform?
In an August 15 update on its website, Kraken announced that it is temporarily stopping the deposit of Monero tokens on its trading platform after detecting that a single mining pool has taken control of more than half of the blockchain’s total hashing power.
The cryptocurrency exchange said:
This concentration of mining power poses a potential risk to network integrity. We are actively monitoring the situation and will resume deposits once we determine it is safe to do so. Trading and withdrawals for XMR remain fully operational.
Following the release of Qubic’s claim, emerging reports on social media platform X revealed that there indeed was a six-block reorganization on the Monero blockchain, suggesting that the team does control a large enough portion of the hash rate.
As Kraken mentioned, it is worth noting that Qubic’s seizure and control of the majority of Monero’s total hashing power could be significantly detrimental to the decentralized ethos of blockchain technology. As it stands—with Qubic controlling 51% of the hash rate, the network is at risk of transaction censoring, double spends, and blocks reorganization, undermining the blockchain’s integrity.
XMR Price Overview
The reaction of the XMR price to these claims of a 51% attack on the Monero blockchain has been fairly measured. While the altcoin did lose more than 10% of its value immediately the news broke out and a further 5% in the subsequent days, the Monero token seems to be recovering well.
As of this writing, the Monero token is valued at around $265, reflecting a nearly 12% jump in the past 24 hours. Meanwhile, CoinGecko data shows that the altcoin is down by only 4% on the weekly timeframe.
The price of XMR on the daily timeframe | Source: XMRUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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