Crypto exchange Kraken has temporarily suspended deposits of Monero (XMR) after confirming that a single mining pool gained control of more than half of the network’s computing power. The move was described as a precautionary measure following growing concerns about the security of one of the largest privacy-focused cryptocurrencies.
Reports indicated that Qubic, a layer-1 blockchain and mining pool specializing in artificial intelligence applications, was behind the event. The project claimed responsibility for reorganizing six blocks on the Monero blockchain after exceeding the critical 51% threshold of the network’s hashrate. Control at this level can allow a miner to manipulate transaction ordering and potentially attempt double-spending.
Monero, currently valued at around $6 billion and ranking as the 29th-largest cryptocurrency by market capitalization, has long been considered one of the most widely used privacy protocols in the digital asset space. Kraken stated that the unusually high concentration of mining power in the hands of one pool presented a significant risk to the integrity of the network, prompting the decision to pause deposits until the situation is clarified.
Qubic’s rise and claims of dominance
Qubic alleged that the takeover was the result of a month-long battle for mining dominance over Monero. The pool initially suffered a setback on August 4, when a distributed denial-of-service (DDoS) attack reduced its hashrate from 2.6 gigahashes per second (GH/s) to 0.8 GH/s. Despite this, Qubic later recovered and claimed it had successfully established majority control of the network.
A spokesperson for Qubic described the development as a pivotal moment in the cryptocurrency sector, noting that a smaller AI-focused project valued at roughly $300 million had managed to assert dominance over a multi-billion-dollar privacy protocol. Founder Sergey Ivancheglo added that the strategy was designed to monopolize Monero’s mining landscape, with the aim of rejecting blocks generated by rival pools.
The Monero security issue got bad enough that Kraken has suspended deposits. 👀
Better get a security overhaul done fast! pic.twitter.com/jDsTFZTEYX
— Joel Valenzuela (@TheDesertLynx) August 16, 2025
A test of proof-of-work vulnerabilities
The situation highlights an enduring weakness of proof-of-work blockchains, where concentrated mining activity can leave networks exposed to what is known as a 51% attack. When a single entity controls the majority of computational power, it gains the ability to rewrite parts of the blockchain or censor transactions, undermining network reliability.
A 6 re-org does not mean a '51% attack' was successful. In that case, we'd see unbounded-depth re-orgs/no blocks mined by any other mining pool (assuming the adversary censors other mining pools, as this one does).
It does mean an adversary with a high amount of hash got lucky.
— Luke Parker (@kayabaNerve) August 12, 2025
The conflict traces back to late June, when Qubic redirected its proof-of-work capacity—normally used for AI tasks—toward Monero mining. The project indicated that any XMR mined would be used to fund buybacks and token burns, aligning its financial incentives with securing and expanding control over Monero.
Developers divided on severity
Monero’s developer community has been divided in its response to Qubic’s claims. Luke Parker, lead developer at decentralized exchange SeraiDEX, argued that a six-block reorganization did not conclusively prove a full-scale 51% attack, suggesting instead that the pool may simply have benefited from temporary good fortune in block validation.
Other cybersecurity experts have issued stronger warnings. Zhong Chenming, co-founder of security firm SlowMist, stated that the episode appeared to demonstrate a successful takeover, stressing that Qubic’s mining pool could in theory censor transactions or attempt to rewrite portions of the blockchain.
The confrontation has unsettled Monero’s community, which has long emphasized resilience and privacy as the core strengths of the protocol. For observers, the incident underscores the ongoing risks proof-of-work systems face when mining activity becomes overly concentrated, leaving even established networks vulnerable to disruption.