⚠️A hedge fund built entirely on the AI trade has BLOWN UP almost overnight: Situational Awareness, the ~$20 billion hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, sold the bulk of its public equity portfolio to Citadel this week after mounting losses forced it to meet MARGIN CALLS from its prime brokers, according to the Wall Street Journal. This comes as Situational Awareness had used significant leverage to amplify its AI-related bets. The fund is also reportedly seeking fresh capital and marketing stakes in private AI companies, including Anthropic, as it works to stabilize its finances. Its largest AI positions have been hit hard. Before rebounding on Thursday, Nebius Group was down 48% from last month's peak, wiping roughly $35 billion from its market value. Sandisk and SharonAI Holdings had also fallen more than 50% since mid-June. Situational Awareness was also a cornerstone investor in SK Hynix's US listing, which traded 15% below its IPO price on Wednesday, while its bearish bets against software companies such as Adobe also moved against the fund. Just weeks ago, the fund was up +439% on a net basis through June, according to its own investor letter reported by the Financial Times. The same leverage that fueled one of this year's biggest AI winners is now accelerating its downfall.