Huo Xing Cai Jing reports that on August 1, prominent financial media Wall St Engine revealed behind-the-scenes details of the collapse of “AI Oracle” Leopold Aschenbrenner: After mid-July, the market rapidly cooled, causing the stock prices of Situational Awareness’s holdings to decline, triggering daily monitoring by banks such as Goldman Sachs and J.P. Morgan, which issued margin calls. It is understood that during this period, other hedge funds learned of the situation and initiated short positions against its holdings, creating a feedback loop of “price decline → margin call → forced selling → further downward pressure on stock prices.” Leopold Aschenbrenner later compared this scenario to a bank run. By late July, while attending a multi-day wedding in Carmel, Leopold and his team worked through the night negotiating to keep the fund afloat. On the evening of July 29, Leopold reached a preliminary agreement with investors to sell approximately $3.5 billion in Anthropic equity to a consortium led by Greenoaks and Sequoia. However, between midnight and market open on July 30, Leopold Aschenbrenner changed his decision, opting to retain the private portfolio and instead sell public equity positions. Citadel and Millennium then negotiated with the fund’s team until after midnight. Citadel ultimately reached an agreement before Thursday’s market open, purchasing the majority of the fund’s public equity holdings at a discount of more than 10% below their then-market value. This transaction enabled Situational Awareness to meet its margin requirements without defaulting. Following the transaction, related AI and semiconductor stocks rebounded on Thursday, generating profits for Citadel. Around July 31, 2026: Situational Awareness sent a letter to investors confirming a net loss of approximately 67% for July, but a net gain of about 80% for the full year. Leopold Aschenbrenner stated he takes full responsibility for the event; the fund has completely eliminated bank leverage and plans to continue operations with investments in public markets, while restructuring its portfolio management and risk teams.
AI Investor Leopold Aschenbrenner's fund avoids default by selling public stocks.
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Summary
Value investing in crypto was put to the test as Leopold Aschenbrenner’s fund, Situational Awareness, narrowly avoided default. By mid-July, equity positions had declined, prompting Goldman Sachs and Morgan Stanley to monitor the situation closely. Short sellers accelerated the downturn. During Aschenbrenner’s wedding in Carmel, the team secured emergency funding. Initially planning to sell Anthropic equity to Greenoaks and Sequoia, they pivoted to public equities instead. Citadel purchased the majority of the public holdings at a discount, enabling the fund to meet margin calls. AI and semiconductor stocks rebounded, aiding Citadel’s position. On July 31, the fund reported a 67% loss for July but an 80% gain for the year. These moves tested key support and resistance levels across the portfolio.
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