Situational Awareness hedge fund collapses after losing $35 billion in AI selloff

Jul 30, 2026

Leopold Aschenbrenner's AI-focused hedge fund, Situational Awareness, has collapsed after its assets plummeted from a peak of $45 billion to $10 billion. The fund, which used high leverage to make concentrated bets on AI stocks, was forced to sell its public portfolio to Ken Griffin's Citadel at a discount amid a sharp market downturn. The 24-year-old founder, a former OpenAI researcher, had attracted high-profile Silicon Valley investors despite having no prior trading experience.

Hedge fund collapse

▪Prior to its collapse, the fund had returned 439% for the year through June 2026 and over 1,000% since its inception
▪After Citadel acquired the fund's public portfolio, several related AI stocks like Sandisk and Nebius rallied
▪The collapse was triggered by steep losses in AI-related stocks, which led to margin calls from lenders
▪The hedge fund employed only eight people, of whom four were investment professionals
▪Situational Awareness retains its private investments, including a stake in Anthropic valued at $5 billion
▪Situational Awareness's assets fell from a peak of $45 billion to about $10 billion in July 2026
▪The fund sold a large portion of its public stock portfolio to Ken Griffin's Citadel at a discount

Leopold Aschenbrenner background

▪Before starting his fund, Aschenbrenner worked at OpenAI's "Superalignment" team and was fired in 2024 for allegedly sharing confidential information
▪Leopold Aschenbrenner, the fund's founder, is 24 or 25 years old and had no prior experience running a hedge fund
▪Aschenbrenner graduated as valedictorian from Columbia University at age 19 after enrolling at 15
▪While at Columbia University, Aschenbrenner co-founded the school's chapter of Effective Altruism
▪Aschenbrenner previously worked at the Future Fund, the philanthropic arm of the collapsed crypto firm FTX

Situational Awareness essays

▪The essays served as the theoretical basis for the fund's strategy of investing heavily in AI-related infrastructure companies
▪The essay argued that artificial general intelligence (AGI) could arrive by 2027 and that governments were underestimating the pace of AI progress
▪Aschenbrenner named his hedge fund after his 165-page essay, "Situational Awareness," published in June 2024

Investor backing

▪Early backers included Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman, and investor Daniel Gross

Risk management failure

▪In a July 24, 2026 letter, Aschenbrenner called the selloff a buying opportunity and unsuccessfully invited clients to commit more capital
▪The fund's collapse is being compared to historical blow-ups of highly-leveraged funds like Long-Term Capital Management and Peter Thiel's Clarium Capital
▪The fund's losses were amplified by the use of high leverage, reportedly as much as 400%