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Kraken Temporarily Halts Monero Deposits Amidst 51% Attack Concerns
The cryptocurrency exchange Kraken has recently announced a temporary suspension of Monero (XMR) deposits on its platform. This decision was made in response to an ongoing 51% attack targeting the Monero blockchain, a network known for its privacy-focused and open-source protocol.
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Understanding the 51% Attack
A 51% attack occurs when a group of miners gains control over more than half of a blockchain’s mining hash rate. On August 12, Qubic, a project spearheaded by IOTA co-founder Sergey Ivancheglo, reported that it had acquired a majority of the Monero blockchain’s hash rate. This unprecedented control was achieved using a mechanism known as useful proof-of-work (uPoW or UPoW). According to reports on Bitcoinist, the Qubic team is converting half of the mining profits, initially earned in XMR, into USDT to purchase QUBIC tokens, which are then sent to a burn address.
Reasons Behind Kraken’s Suspension of Monero Deposits
In an update posted on August 15, Kraken announced the temporary halt of Monero deposits. This decision was prompted by the detection of a single mining pool controlling over 50% of the blockchain’s total hashing power.
“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,” stated the cryptocurrency exchange.
Following Qubic’s announcement, reports on social media platform X indicated a six-block reorganization on the Monero blockchain, suggesting that the team has considerable control over the hash rate. This level of control could threaten the blockchain’s decentralized nature, leading to potential risks such as transaction censorship, double spending, and block reorganization, all of which could compromise the network’s integrity.
Monero (XMR) Price Analysis
The Monero (XMR) price has shown resilience in the face of the 51% attack allegations. Despite an initial drop of over 10% following the news and an additional 5% loss in the days that followed, the XMR token is exhibiting signs of recovery.
At the time of writing, Monero is priced at approximately $265, marking a significant 12% increase in the past 24 hours. Data from CoinGecko indicates that the altcoin’s weekly decline is a modest 4%.
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