Kraken Halts Monero Deposits Amid Qubic Attack—Is Privacy Crypto Under Siege?
Kraken just slammed the brakes on Monero deposits—and the crypto world is buzzing. Was it Qubic's alleged blockchain exploit that spooked them? Or is this another kneejerk reaction from exchanges playing regulatory whack-a-mole?
Privacy coins in the crosshairs
Monero's XMR—the OG of untraceable transactions—just hit a snag. Kraken's sudden freeze follows whispers of Qubic's 'attack' (read: clever exploit) on Monero's protocol. No official numbers yet, but insiders say the move reeks of exchange risk management theater.
Meanwhile, Bitcoin maximalists are smugly tweeting 'I told you so' about privacy coins. Because apparently financial transparency should stop at Wall Street's offshore accounts.
What's next? Watch for other exchanges to fold like cheap suits. Monero's tech might be sound, but when exchanges get spooked, liquidity follows suit—right into the waiting arms of 'compliant' shitcoins.
Monero Faces Rare 51% Attack
The attack centers on a 51% takeover of Monero’s blockchain. Such an attack occurs when one mining pool controls most of the network’s computing power. With majority control, the pool can reorder transactions, censor payments, or even spend the same coins twice. Qubic said it reorganized six blocks after gaining dominance, pointing to proof that it could dictate the ledger’s order.
The confrontation between Monero developers and Qubic has been building since late June. Qubic initially redirected its AI-powered proof-of-work model toward Monero mining. Its goal was to use mined XMR to fund token buybacks and burns for its own project. This gave it a financial incentive to overpower the network. The result was an escalating battle for control, ending with Qubic claiming majority hashrate and announcing a clear victory.
Monero Community Pushes Back
Despite Qubic’s claims, Monero developers remain unconvinced. Luke Parker, lead developer at SeraiDEX, said the six-block reorganization only proves that an adversary with high hash power got lucky. He argued it does not prove sustained control. However, other cybersecurity experts disagree. Zhong Chenming of SlowMist warned that Qubic’s dominance appears real and dangerous. In his view, the pool could now censor transactions or rewrite the blockchain’s history.
This split reflects the uncertainty of proof-of-work networks under pressure. While Monero has long prided itself on resilience and privacy, the attack highlights how vulnerable even large protocols remain when mining power becomes concentrated. For years, developers have warned that proof-of-work systems depend on distributed participation. Qubic’s rise shows how fragile that balance can be when an outside force with strong incentives enters the market.
Qubic’s Bold Strategy
Qubic’s leadership openly embraced the aggressive move. Founder Sergey Ivancheglo admitted the strategy aimed to monopolize Monero’s mining. The team even dismissed rival mining pools’ contributions, rejecting blocks that did not originate from its own dominance. At one point, Qubic’s power fell sharply after a distributed denial of service (DDoS) attack cut its hashrate by two-thirds. But after recovering, the pool surged back to seize more than half the network.
Qubic framed the event as historic. A spokesperson declared it marked a pivotal moment: a $300 million AI-driven protocol overtaking a $6 billion privacy giant. Whether that framing is accurate or exaggerated, the attack underscores new tensions between AI-focused projects and established blockchain networks. It also shows how competition for resources can push smaller protocols into high-stakes conflicts with global crypto leaders.
What Comes Next for Monero and Kraken
The situation leaves Monero at a crossroads. Developers must decide how to address the risk of concentrated mining power before investor confidence erodes further. Options include promoting more decentralized mining, improving detection of manipulation, or even altering consensus mechanisms in the long term. For Kraken, the suspension highlights its role as a first line of defense for users. The exchange’s quick action may have prevented losses and preserved trust, but it also raised questions about Monero’s reliability.
For now, Monero users can still trade and withdraw on Kraken. Yet deposits remain frozen until the network proves SAFE again. This episode is more than a short-term disruption. It is a reminder of the ongoing challenges in blockchain security. As Qubic pushes forward with its AI-driven strategy, Monero must strengthen its defenses or risk facing more attacks in the future.
