Posted on 08/01/2026 6:49:27 AM PDT by Red Badger
Key Points
* Former OpenAI researcher Leopold Aschenbrenner’s AI hedge fund, Situational Awareness, collapsed from $45 billion to around $10 billion in assets on falling semiconductor stocks and mounting margin calls.
* Driven by reported leverage of up to 400%, the 20-something manager was forced to sell off all his leveraged public stock bets — including hard-hit names like SK Hynix and CoreWeave — to Ken Griffin’s Citadel at a discount.
* The crash marks a dramatic turn for Aschenbrenner, who launched the fund after gaining Silicon Valley fame with his 2024 AI manifesto, drawing scrutiny from critics over his lack of money management experience and his past ties to FTX.
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Leopold Aschenbrenner Photo: Josh Edelson
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Two years ago, Leopold Aschenbrenner argued he was one of few people in the world who saw the future clearly.
In a sprawling, 165-page essay that became required reading in Silicon Valley, the former OpenAI researcher positioned himself as a kind of prophet for the coming age of artificial super intelligence.
But this week, the limits of Aschenbrenner’s vision were on display when the AI-themed hedge fund he runs — named Situational Awareness, also the title of his viral June 2024 manifesto — ran into the harsh reality of tumbling semiconductor stocks and Wall Street margin calls.
At its peak earlier this month, his fund sat atop $45 billion in assets. By Thursday, however, after being forced to offload all of his leveraged stock bets — including hard-hit names like SK Hynix and CoreWeave — to Ken Griffin’s Citadel at a discount, the fund’s holdings plunged to around $10 billion, according to people with knowledge of the situation.
The story of Aschenbrenner’s meteoric rise and sudden fall has captivated both Wall Street and tech circles, making him the most high-profile casualty yet of the volatility accompanying the AI boom.
A polarizing figure, his online followers saw Aschenbrenner — a Columbia University valedictorian at age 19 — as a genius of the next big thing and followed his fund’s quarterly filings for clues on hot AI stocks.
Before this month’s decline, Situational Awareness racked up gains of more than 1,000% since inception, The Wall Street Journal reported last month. The Journal noted Aschenbrenner was just 24 years old.
VIDEO AT LINK.....................
Meanwhile, critics pointed out that Aschenbrenner had no experience running money prior to launching his fund in July 2024, calling him more lucky than smart. Some noted that his early work experience was at the doomed crypto firm FTX, where he helped now-disgraced founder Sam Bankman-Fried run a charity out of a Bahamas penthouse.
Others on Wall Street, including former traders at global investment banks, noted that in light of reports Situational Awareness used as much as 400% leverage, the collapse wasn’t shocking.
“A lot of people saw this blow-up as a matter of not if, but when,” said Jerry Diao, who runs a Wall Street coaching firm. “Maybe his views on AI are correct in the long run, but in the public markets, you have to be prepared for the short-term.”
The hedge fund didn’t immediately respond to a request for comment from CNBC.
Earlier this week, before the sale to Citadel, about two-thirds of Situational Awareness holdings were in long and short positions in public equities, according to one source. The rest were stakes in private companies, dominated by a multibillion-dollar Anthropic investment, the person said.
CNBC’s sources spoke on the condition of anonymity to discuss nonpublic details.
The near-collapse of Situational Awareness coincides with the hedge fund manager’s wedding, set for this weekend, sources told CNBC’s David Faber. Aschenbrenner is engaged to Avital Balwit, chief of staff for Anthropic CEO Dario Amodei, according to a Fortune profile.
‘Weirdness’ and ‘disagreeableness’ Born in Germany to physician parents before moving to the U.S., Aschenbrenner showed an early aptitude for math and computer science, according to profiles and podcast interviews.
He skipped several grades in the German school system, graduating high school at age 15, and as a teen at Columbia University he garnered attention for an academic paper titled, “Existential Risk and Growth.”
A Columbia classmate, Sofia Montrone, said that she hadn’t heard of Aschenbrenner before meeting him over Zoom shortly before their 2021 graduation.
“It was not like he was some prince, emerging out of the school,” Montrone told CNBC. “He was just some guy.”
In the interaction, Montrone, who was salutatorian, said she found her classmate “child-like” and socially awkward.
Aschenbrenner has since said that his personality — what he called his own intellectual “weirdness” and “disagreeableness” — was punished in German culture. He came to see it as the source of his edge.
While at Columbia, he co-founded the school’s chapter of Effective Altruism, a philosophy popular in some tech circles that advocates for founders to make the most money possible in order to help humanity.
That network became his career pipeline, eventually leading him to work with another effective altruism proponent — Bankman-Fried — after his graduation in 2021. He worked for a stint at the Future Fund, the philanthropic arm of FTX, before the crypto firm’s collapse.
In 2023, Aschenbrenner landed on OpenAI’s Superalignment team, working under Ilya Sutskever on the problem of keeping AI aligned with human interests. After a hacker breached OpenAI’s internal systems, he wrote a memo to the board warning that the company’s security wasn’t strong enough to stop foreign espionage, naming China specifically.
In 2024, the company fired Aschenbrenner after accusing him of improperly sharing confidential information, a characterization he has disputed, saying he was raising concerns about the company’s security practices.
“I liked Leopold while at OpenAI,” Scott Aaronson, a computer scientist now at the University of Texas at Austin who previously worked on AI safety at OpenAI, told CNBC this week in an email.
“I was sorry when he got pushed out because of sharing information in a way leadership didn’t approve of,” he said. It “sounded like he was trying to do the right thing and they overreacted.”
An OpenAI spokesman declined to comment and referred to statements the company made at the time that the firm disagreed with many of Aschenbrenner’s claims.
Representatives for Columbia University and its Effective Altruism chapter didn’t respond to requests for comment.
Stripe, Github investors Weeks after his departure from OpenAI, Aschenbrenner turned his brief experience at the leading AI firm into a sweeping vision of where artificial intelligence, and the world, was headed.
His June 2024 essay argued that artificial general intelligence could arrive within years and that governments were badly underestimating the pace of progress. Admirers saw it as evidence that Aschenbrenner was a prodigy with valuable insight into AI’s trajectory, while critics said it overstated both the technology’s near-term capabilities and his own certainty about the future.
By July of that year, Aschenbrenner parlayed his rising fame into seed capital for his hedge fund, raising a reported $225 million from Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman and investor Daniel Gross.
That would mark the start of a two-year run unlike any in recent Wall Street history.
“Before long, the world will wake up,” Aschenbrenner wrote at the time, adding that only a few hundred people in the AI community knew what was coming.
“If they are seeing the future even close to correctly,” he wrote, “we are in for a wild ride.”
— CNBC’s Kate Rooney contributed to this report.
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Financial Tech Ping!.................
Meanwhile, critics pointed out that Aschenbrenner had no experience running money prior to launching his fund in July 2024, calling him more lucky than smart. Some noted that his early work experience was at the doomed crypto firm FTX, where he helped now-disgraced founder Sam Bankman-Fried run a charity out of a Bahamas penthouse.
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so, if Aschenbrenner was using the SBF/FTX model, how much of this loot was peeled off to the crooked pols?
10% for the Big Guy.................
I was jus watching an interesting YouTube video on this guy and his current troubles when I noticed this discussion:
I’m looking for something special or different here and haven’t found it
All I see is the conceit and hubris of a young, smart man, and the unavoidable consequences.
As someone who has committed a lot of time to working with various AI tools as a computer hobbyist... it has become more and more obvious that herd mentality is leading to what is inevitably going to become a massive financial disaster. The only real question is how long it is going to take for investors to realize that the emperors have no clothes.
Aschenbrenner’s early work experience was at the doomed crypto firm FTX,
helping jailed founder Sam Bankman-Fried run a “charity” out of a Bahamas penthouse.
A simple story. He was highly leveraged in AI boom stocks that have gone down 30% in the last three months. NVidia too.
If I were an AI genius like him. I would have had my super duper AI computer dumping these stocks before the AI SHTF.
This looks like a case of emotions ruling, where you get married to a stock because of its charming narrative.
Good link to this video. I am watching it. But only because the Iran war analysis videos are sluggish these days.
AI is not artificial or intelligent and same goes for this guy he just made a few at the top richer ,LOL I’m thinking AI is the new Scam ,LOL
the weird thing is that reports indicate that the fund is still up 80% year-to-date, despite the precipitate drop in value and forced discounted sale of assets to Citadel to meet margin calls ...
however, later individual investors are likely down by billions if/when they cash out because units [shares] are priced based on NAV [net asset value], which means they would have bought high and have to sell low ...
Yes I read that too, it’s weird. And you are right initial investors might be up the 80% but certainly not recent ones.
At its core, this collapse comes down to a simple truth: even a smart prediction will fail if you gamble with too much borrowed money.
The AI software bubble will inevitably burst; the only real question is how long it will take. In the meantime, five big mistakes destroyed this fund:
1. BORROWED MONEY KILLS GOOD IDEAS
Betting on real world needs like electricity and concrete while betting against overpriced tech sounds logical. But borrowing tons of cash leaves zero room for bad luck when market prices swing unexpectedly.
2. BEING EARLY IS THE SAME AS BEING WRONG
You cannot predict exactly when a bubble will pop. Overpriced tech companies can stay inflated far longer than a fund can survive on borrowed time.
3. BIG TECH IS PLAYING A SHELL GAME
Giant tech companies are using their own money to fund the same data centers that buy their chips. This creates a fake sales loop that makes the industry look much healthier than it really is.
4. LENDERS CAN WIPE YOU OUT OVERNIGHT
Relying heavily on loans means lenders can demand their cash back the second things look shaky. This forces you to sell everything right away at painful losses.
5. HEAVY SPENDING DOES NOT GUARANTEE PROFITS
Throwing billions at land, power, and construction does not mean stock prices will keep rising, especially when higher interest rates make everything more expensive.
Conclusion
A smart prediction means nothing if you gamble away your safety net. When hype and artificial accounting inflate a giant bubble, trying to bet against it with borrowed money guarantees you will lose everything long before reality catches up.
I can commiserate. The very same thing happened to me many years ago. I borrowed 10 dollars from my brother to buy a wheelbarrow to collect pop cans to sell. Somebody stole my wheelbarrow before I could pay it back.
LOL! Great movie. Don Amiche was a great actor
He is goofy looking.
He is 24.
He worked for a crook named Sam Bankman-Fried.
He stole code from OpenAI and sold it (sharing information) to a competitor named Anthropic and he was fired.
He somehow convinces investors to give him billions and for every dollar he then borrowed 3 or 4 more dollars.
My broker does not allow me to borrow over 20% of what I have.
He is a crook running a ponzi scheme and when his company crashes it will take billions from the stupid investors.
He is a crook running a ponzi scheme and when his company crashes it will take billions from the stupid investors.
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Pretty sharp deconstruction of the operation
Just one question: how much goes to the crooked pols
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