- Leopold Aschenbrenner was hailed as the 'Nostradamus' of AI; he predicted in 2024 that 'Before long, the world will wake up,' and this week it did, but not in the way he had foreseen.
- His hedge fund, Situational Awareness, was forced to sell billions of dollars of technology investments as banks demanded more collateral, and Aschenbrenner began liquidating positions to meet margin calls.
- The fund's assets plunged from $45 billion at the start of July to about $10 billion; it lost about 67% in July but was still up about 80% on the year.
- Ken Griffin's Citadel reached out to Situational Awareness after hearing about its troubles; a deal was struck just before the market opened on Thursday, bailing out the firm and allowing it to keep all its private companies.
- Aschenbrenner, a former OpenAI researcher with no previous investment experience, previously helped run the FTX Future Fund and was fired from OpenAI's Superalignment team in 2024.
- Goldman Sachs, JPMorgan Chase and Bank of America were among the banks that powered the fund's rise, with some offering to lend four to five times its capital; Barclays turned the firm away over its concentrated exposure to one sector.
- As it raced to raise capital, the fund considered selling private investments including its $5 billion stake in Anthropic; Millennium Management and Jane Street Group were among the firms that considered buying a large block of shares.
- Aschenbrenner wrote to clients, 'We let you down this month,' took full responsibility, blamed short sellers for part of July's plummet, and vowed to run his public stock portfolio without leverage while drawing lessons from the events.
Leopold Aschenbrenner, once celebrated as the 'Nostradamus' of AI, faced a dramatic downfall as his hedge fund, Situational Awareness, plummeted from $45 billion to $10 billion in July due to heavy borrowing and market instability.123456910151617
Aschenbrenner, a former researcher at OpenAI, had predicted a tech renaissance, stating, “Before long, the world will wake up,” but the reality was starkly different. His firm was forced to liquidate assets as banks demanded more collateral amid a downturn in technology shares.
The hedge fund suffered a 67% loss in July, although it remains up 80% for the year, according to a letter sent to investors.
In a swift response to the crisis, Ken Griffin of Citadel intervened, negotiating a deal that allowed Aschenbrenner to retain his private investments. This came after a series of margin calls and a desperate search for capital, including attempts to sell a $5 billion stake in Anthropic.78
Aschenbrenner acknowledged the failures, stating, “We let you down this month,” and took full responsibility, attributing part of the decline to aggressive short selling. He pledged to manage his public stock portfolio without leverage moving forward.
“Situational Awareness's assets plunged from $45 billion at the start of July to about $10 billion, after the fund lost roughly 67% in July. Ken Griffin's Citadel reached a deal just before Thursday's market open to buy the investments at a discount, letting Aschenbrenner keep his private companies.”
