Kraken Suspends Monero (XMR) Deposits Following Alleged 51% Hashrate Attack

Market Context

The pause on Monero deposits comes amid broader unease about mining centralization within smaller proof-of-work networks. It highlights how concentrated hashrate control—even temporarily—can challenge blockchain stability and investor trust, raising important questions about the resilience of niche cryptocurrencies.

Technical Details

• Claimed 51% Control: On August 12, the Qubic mining pool—led by IOTA co-founder Sergey Ivancheglo—allegedly seized majority control of Monero’s hashrate, enabling a six-block reorganization using a “useful proof-of-work” mechanism, and converting half of mined XMR into USDT to burn QUBIC tokens. 
• Kraken’s Response: On August 15, Kraken announced a temporary suspension of XMR deposits, citing concentration risk to network integrity. Trading and withdrawals for XMR remain uninterrupted. 
• Technical Risks: A 51% threshold in mining consensus enables possibilities like transaction censorship, double-spending, or reordering blocks—threatening core blockchain properties. 
• Market Reaction: Monero’s price briefly dropped around 6–10% but rebounded swiftly to approximately $265, signaling investor resilience and confidence in the network's ongoing functionality. 

Analyst Perspectives

Observers note that while Qubic’s actions may have been a technical stress test, the impact underscores genuine risks—primarily in mining centralization—which can unfold into broader structural threats. Analysts suggest that such incidents serve as wake-up calls to bolster decentralization and monitoring, stating that while the network appears stable now, “the event highlights underlying vulnerabilities that warrant caution and proactive safeguards.”

Global Impact Note

This episode underscores how smaller, privacy-focused cryptocurrencies like Monero are vulnerable to hashrate concentration—impacting global investor sentiment and trust. If similar attacks occurred on a larger stage, market participants might shift toward more robust networks or adopt stricter security models, influencing policy and infrastructure choices worldwide.