Leopold Aschenbrenner’s AI-focused hedge fund, Situational Awareness, sold most of its public stock portfolio to Ken Griffin’s Citadel following steep July market losses and heavy leverage pressure. Industry leaders and analysts weighed in on the fallout.
An artificial-intelligence-focused hedge fund launched by a former OpenAI researcher has unloaded a major portion of its public-equity holdings to Ken Griffin’s Citadel. The transaction comes in the wake of severe technology sector volatility that slashed the fund’s asset value and triggered urgent demands for capital.
Leopold Aschenbrenner’s Fund Unwinds Public Portfolio Amid July Market Rout
Situational Awareness, founded by Leopold Aschenbrenner, parted with the bulk of its publicly traded stock portfolio after suffering steep losses during a July technology sell-off seekingalpha.com. The fund took its name from Aschenbrenner’s 2024 essay series, Situational Awareness: The Decade Ahead,
which argued that artificial general intelligence could arrive by 2027 and drive massive demand for computing power and electricity.
Before founding his fund and joining OpenAI, Aschenbrenner was a member of the FTX Future Fund team and signed its November 2022 resignation notice as FTX collapsed. His new venture scaled rapidly, growing to about $24 billion in assets in under two years before hitting turbulence. cointelegraph.com, the fund fell about 67% in July, though an investor letter indicated it remained up about 80% for the year following a reported 439% gain through June.
Leverage Pressures, Margin Calls, and the Citadel Transaction
The swift reversal forced Aschenbrenner’s fund to seek fresh capital from lenders and investors while exploring options to offload assets. cointelegraph.com indicated the fund needed cash to meet margin calls from lenders and agreed Wednesday to sell $3.5 billion of Anthropic shares to a group led by Greenoaks and Sequoia Capital before withdrawing from that deal Thursday morning.
Reuters reported the portfolio was leveraged, though it could not determine whether formal margin calls had been issued prior to the sale. Situational Awareness retained roughly $10 billion in stocks and private investments, including its stake in Anthropic, while Citadel stepped in to buy the bulk of the publicly traded holdings.
Wall Street and Tech Leaders React to the Meltdown
Market observers pointed directly to the risks of excessive borrowing in volatile trading environments.
“Citadel just bamboozled this kid. The so called wiz kid. Turns out maybe some trading experience is necessary to play on this court.”
Ross Gerber, CEO of Gerber Kawasaki
Gerber added a warning for market participants: This is a hard business. Leverage will kill and bury you. Anyways. Thanks for the cheap stocks this week. Us long term players got a bargain for a week.
Other analysts highlighted the disconnect between long-term vision and near-term market mechanics. Michael Dempsey, managing partner at Compound, noted that while Aschenbrenner’s macroeconomic thesis commanded respect, the fund relied too heavily on a single overarching trade.
“That said, anyone who has experience in public markets could somewhat easily see this was One Big Trade and so probably there should have been way better views on risk besides buying index-level puts.”
Michael Dempsey, managing partner at Compound
Shay Boloor, chief market strategist at Futurum Equities, described the sequence of events as the story of 2026,
noting that Citadel had pushed surprise-rate-hike fears just days before the AI trade collapsed and forced the leveraged fund to unload near market lows.
Bitcoin Miners and Tech Holdings Caught in the Rout
A series of stocks linked to the fund suffered sharp double-digit declines during July. Yahoo Finance data cited by Cointelegraph showed Sandisk down about 44% for the month even after a late-week recovery, while CoreWeave fell nearly 26% and Bloom Energy dropped around 32%.
Securities and Exchange Commission filings filed by Situational Awareness as of March 31 revealed direct share positions in those companies alongside approximately $1.11 billion in shares across seven Bitcoin mining firms, including Iren, Core Scientific, Riot Platforms, and CleanSpark. Those positions reflected a broader industry trend of miners repurposing power supplies and data center sites to support artificial intelligence and high-performance computing operations.
Worth a look