Situational Awareness was built to surf the AI infrastructure boom. Its violent retreat from public markets has now drawn the attention of Washington’s top securities regulator.

Founded in 2024 by former OpenAI researcher Leopold Aschenbrenner, the fund wagered heavily on the chips, memory, computing and energy needed to scale artificial intelligence. The bet initially looked spectacular: the fund returned 439% through June and reportedly grew to as much as $45 billion at its peak.¹

Then the trade turned. As concerns mounted that enormous AI capital spending was not producing near-term revenue, holdings including SK Hynix, Sandisk, Bloom Energy and Nebius fell sharply. Leverage magnified the damage, leaving Situational Awareness exposed when lenders issued a barrage of margin calls.¹

The fund had sought fresh money after the sell-off, but the effort did not produce the commitments it had hoped for. It subsequently sold its public-equity book to Ken Griffin’s Citadel, according to Axios, which described the move as a complete exit from listed stocks amid the AI rout.² Citadel’s intervention also underscored a difference in posture: both firms shared AI-infrastructure exposure, but Citadel had the liquidity to hold assets that the leveraged fund could no longer carry.¹

Situational Awareness did not fully abandon its AI thesis. It retained private investments, most prominently an Anthropic stake Bloomberg valued at $5 billion, leaving open the possibility that private-market gains could cushion the public-market collapse.¹

The latest turn came after the unwind. The Securities and Exchange Commission has subpoenaed major Wall Street banks for information related to the fund’s trading activity, according to people familiar with the matter. The agency declined to comment, and the report stressed that an inquiry does not necessarily mean a firm is the target of an investigation or that enforcement will follow.³

Situational Awareness cast the regulatory interest as a predictable consequence of its rise and fall: “It is to be expected that regulators would closely examine any funds that are high profile, produce significant returns, or have particularly dramatic drawdowns.” It added: “We are a highly-regulated business and will cooperate to the fullest extent with any regulatory request.”³