Two years ago, Leopold Aschenbrenner left OpenAI and published a 165-page essay about the future of artificial intelligence. Then he started a hedge fund.
Situational Awareness LP, the AI-focused hedge fund Aschenbrenner launched in July 2024, peaked at roughly $45 billion in assets under management by early July 2026. Weeks later, a vicious correction in semiconductor stocks wiped out an estimated $35 billion, cratering the fund’s AUM to approximately $10 billion. That’s a drawdown of about 67%.
The unraveling
The fund had built its fortune on aggressive, concentrated bets in AI infrastructure equities. For months, those positions generated multi-hundred percent returns.
When semiconductor stocks turned south, the losses triggered margin calls from Goldman Sachs, JPMorgan, Bank of America, and Citibank. Meeting those calls required the fund to liquidate most of its public equity portfolio.
The buyer was Ken Griffin’s Citadel, which scooped up approximately $16 billion in assets from the distressed sale. Citadel moved quickly to reduce its own exposure, unwinding over 80% of the acquired risk through block trades.
From public markets to private bets
Despite the carnage in its public portfolio, Situational Awareness didn’t shut down entirely. The fund pivoted toward private investments, deploying an additional $400 million into a previously unidentified private company by August 2026. That brought the fund’s total commitment to that single entity to $500 million.
What the SEC is looking at
The Securities and Exchange Commission has reportedly turned its attention to the fund. Regulatory filings have so far indicated compliance, and monitoring has been tied primarily to the scale of market movements rather than any active investigation against the fund or Aschenbrenner.