# AI Hedge Fund Liquidation and Regulatory Scrutiny > Live situation record from CLSTR: https://clstr.news/situations/ai-hedge-fund-situational-awareness-crisis > Updated: 2026-09-14T18:25:14.000Z. Sources: 138. Developments: 14. Leopold Aschenbrenner’s AI-focused hedge fund, Situational Awareness, which had ballooned to approximately $45 billion AUM and delivered a 439% return by June 2026, suffered a 67% plunge in its public-equity portfolio in July 2026. The collapse was triggered by margin calls following sharp declines in semiconductor and AI infrastructure stocks. The fund, which reportedly utilized up to 400% leverage, saw its AUM drop from $45 billion to approximately $10 billion by mid-August. Specific drivers included massive losses in SanDisk (down 47%) and Micron Technology (down 29%), alongside a 31% drop in Bloom Energy. To meet margin calls, the fund sold most of its $16-$20 billion public holdings—including positions in SK Hynix, CoreWeave, and various Bitcoin mining stocks like Core Scientific and Riot Platforms—to Ken Griffin’s Citadel. Following the acquisition, Citadel executed nearly 100 block trades totaling over $4 billion to offload more than 80% of the inherited risk, stating an aim to be “front-footed and proactive during periods of market dislocation.” The volatility had broader institutional impacts; Jane Street reported a $15 billion loss in July, its first monthly slump in a decade, partly due to its investment in Situational Awareness shrinking from nearly $10 billion to between $3 billion and $3.5 billion. In response to the collapse, the SEC has issued subpoenas to major banks, including Bank of America, Citi, Goldman Sachs, and JPMorgan Chase. The investigation seeks information regarding the fund’s trading activity, the timing of trades that triggered margin calls, and communications between the fund and its lenders concerning the extent of its leverage. The agency is examining borrowing practices used to intensify investments in firms like Micron and SanDisk, though it has not accused Situational Awareness or its leadership of any wrongdoing. The fund has stated it intends to cooperate fully with regulators. ## Claims - The fund was leveraged up to roughly 400 % (about four times its capital). (corroborated by 11 sources) - Citadel is owned by billionaire Ken Griffin. (corroborated by 11 sources) - The fund returned 439 % from early 2026 to June 2026. (corroborated by 10 sources) - The fund’s assets peaked at about $45 billion in mid‑2026. (corroborated by 10 sources) - After the sale, the fund's assets fell to about $10 billion. (corroborated by 10 sources) - Situational Awareness was founded by Leopold Aschenbrenner in 2024. (corroborated by 9 sources) - In July 2026 the fund sold the majority of its public equity holdings to Citadel. (corroborated by 9 sources) - Aschenbrenner wrote to investors confirming the sale and stating the fund was not liquidated. (corroborated by 9 sources) - Situational Awareness was founded in 2024 by former OpenAI researcher Leopold Aschenbrenner. (corroborated by 9 sources) - Situational Awareness has not been accused of wrongdoing and will cooperate with regulatory requests. (corroborated by 8 sources) ## Timeline ### 2026-09-14: Situational Awareness fund faces new losses in AI stock comeback Hedge fund Situational Awareness, led by Leopold Aschenbrenner, saw renewed losses as AI-related stocks and options dropped up to 8% following a broad market sell-off triggered by industry sentiment. 2 sources. https://clstr.news/cluster/situational-awareness-fund-faces-new-losses-in-ai-stock-comeback ### 2026-09-11: Leopold Aschenbrenner resumes AI infrastructure bets via Situational Awareness Hedge fund Situational Awareness, led by Leopold Aschenbrenner, is resuming aggressive AI infrastructure bets via options after a major summer drawdown that saw assets fall from $45 billion to $10 billion. 8 sources. https://clstr.news/cluster/leopold-aschenbrenner-resumes-ai-infrastructure-bets-via-situational-awareness ### 2026-08-24: SEC subpoenas banks over Situational Awareness AI fund collapse The SEC has subpoenaed major banks to investigate the trading activity and leverage used by Situational Awareness, an AI-focused hedge fund that lost 67% of its value during a July market correction. 14 sources. https://clstr.news/cluster/sec-subpoenas-wall-street-banks-over-situational-awareness-hedge-fund ### 2026-08-21: Citadel offloads 80% of Situational Awareness risk Citadel has reduced its exposure by over 80% regarding the Situational Awareness portfolio, executing $4 billion in block trades following the AI-focused fund's recent market losses. 6 sources. https://clstr.news/cluster/citadel-offloads-80-of-situational-awareness-risk ### 2026-08-17: Leopold Aschenbrenner’s Situational Awareness fund loses $30B Leopold Aschenbrenner’s Situational Awareness hedge fund lost 67% of its value in one month following massive losses in SanDisk and Micron Technology, triggering margin calls and a fire sale to Citadel. 4 sources. https://clstr.news/cluster/leopold-aschenbrenners-situational-awareness-fund-loses-30b ### 2026-08-14: Jane Street reports $15 billion loss in July amid AI sector volatility Jane Street reported a $15 billion loss in July, driven by its exposure to Leopold Aschenbrenner’s AI hedge fund, Situational Awareness, following a major technology stock selloff. 8 sources. https://clstr.news/cluster/jane-street-reports-15b-july-loss-driven-by-ai-fund-exposure ### 2026-08-11: Leopold Aschenbrenner’s Situational Awareness Fund faces rapid liquidation Leopold Aschenbrenner’s Situational Awareness Fund, which bet heavily on AI disruption, faced a rapid collapse, losing over two-thirds of its public equity value before being liquidated to Citadel. 2 sources. https://clstr.news/cluster/leopold-aschenbrenners-situational-awareness-fund-faces-rapid-liquidation ### 2026-08-09: Source Foundry secures $400 million investment from Situational Awareness Situational Awareness has invested $400 million in Source Foundry, a stealth AI chip manufacturing startup, bringing its total investment in the company to $500 million. 3 sources. https://clstr.news/cluster/source-foundry-secures-400-million-investment-from-situational-awareness ### 2026-08-07: Situational Awareness invests $500M in chip startup Source Foundry Hedge fund Situational Awareness has invested $500 million in chip startup Source Foundry, targeting semiconductor lithography bottlenecks despite recent heavy losses in public AI stocks. 8 sources. https://clstr.news/cluster/leopold-aschenbrenners-fund-pours-400-million-into-ai-startup-source-foundry ### 2026-08-07: Situational Awareness AI hedge fund collapses after margin calls Leopold Aschenbrenner's AI hedge fund, Situational Awareness, collapsed from $45B to $10B in assets following margin calls, with Citadel taking over much of its forced-sold portfolio. 4 sources. https://clstr.news/cluster/leopold-aschenbrenner-ai-hedge-fund-collapse-triggers-brief-market-panic ### 2026-08-05: Citadel Gains 6% in July After Buying Distressed AI Portfolio Citadel’s Wellington fund jumped ~6% in July after buying a $16 bn distressed AI portfolio from Leopold Aschenbrenner’s Situational Awareness fund at a 10% discount, while the sold fund fell 67%. 10 sources. https://clstr.news/cluster/citadel-gains-6-after-buying-distressed-ai-fund-situational-awareness ### 2026-08-03: Citadel purchases distressed AI hedge fund Situational Awareness's equity portfolio at discount Citadel bought a discounted public equity portfolio from AI hedge fund Situational Awareness after margin calls forced a sale, allowing the fund to keep its Anthropic stake while Citadel gains AI stock exposure 4 sources. https://clstr.news/cluster/citadel-purchases-distressed-ai-hedge-fund-situational-awarenesss-equity-portfolio-at-discount ### 2026-08-01: Leopold Aschenbrenner's AI Hedge Fund Collapses, Sold to Citadel Leopold Aschenbrenner’s AI hedge fund Situational Awareness, once $45 bn and 439 % YTD, sold most public assets to Citadel after a July 2026 chip‑stock slump and margin calls, leaving about $10 bn in assets. 23 sources. https://clstr.news/cluster/leopold-aschenbrenners-ai-hedge-fund-sells-10-b-of-chip-holdings-amid-margin-call ### 2026-07-30: Situational Awareness Hedge Fund Sells Public Portfolio to Citadel After 67% Loss AI hedge fund Situational Awareness, founded by ex‑OpenAI researcher Leopold Aschenbrenner, fell 67% in July 2026 and sold most public equities to Citadel, cutting AUM to ~$10 bn and removing leverage. 77 sources. https://clstr.news/cluster/leopold-aschenbrenners-ai-hedge-fund-situational-awareness-seeks-capital-after-market-rout --- Cite as: AI Hedge Fund Liquidation and Regulatory Scrutiny. CLSTR, https://clstr.news/situations/ai-hedge-fund-situational-awareness-crisis