Two weeks ago, Leopold Aschenbrenner watched roughly $35 billion of investors’ money evaporate in days. His AI hedge fund, Situational Awareness, went from a $45 billion peak in early July to about $10 billion by late July after leveraged bets on AI infrastructure stocks unwound in margin calls. Wall Street and Silicon Valley insiders are now asking to hand him more money. The fund is telling them no, for now.
The Kid With the Essay
Aschenbrenner is 25, though some outlets have put him at 24. German-born, he graduated Columbia valedictorian in 2021 at 19, then joined OpenAI’s Superalignment team before being fired in April 2024 over an alleged information leak he disputes. His June 2024 essay, “Situational Awareness: The Decade Ahead,”, argued AI would rapidly exceed human capability and became required reading in Silicon Valley. Minimum buy-in was reportedly $25 million. Backers included Stripe’s Patrick and John Collison, former GitHub CEO Nat Friedman, investor Daniel Gross, and JPMorgan, Goldman Sachs and Bank of America.
What Blew Up
In late July, AI-linked equities sold off sharply. Situational Awareness was running leverage up to 400% on a concentrated book: long Nebius Group (NASDAQ:NBIS | NBIS Price Prediction), SanDisk (NASDAQ:SNDK), CoreWeave (NASDAQ:CRWV), and Korea-listed SK Hynix, with shorts including Adobe (NASDAQ:ADBE) that moved against the fund. Nebius fell 17.98% between July 1 and Aug 7. Lenders called collateral, and Aschenbrenner sold most of his public-equity portfolio to Ken Griffin’s Citadel at roughly a 10% discount. These were leveraged losses on public bets; no fraud or misappropriation has been alleged. He preserved private stakes: Anthropic (last valued near $965 billion), compute provider Fluidstack, and AI-chip startup MatX. The wipeout landed days before his planned wedding in Carmel, California, to Avital Balwit, chief of staff to Anthropic CEO Dario Amodei.
The Rebound
By Aug 7, Bloomberg, Situational Awareness was fielding investor requests for fresh capital, though Aschenbrenner told limited partners the fund isn’t accepting new money for now. More than 5,000 investors reportedly still copy his trades on retail platforms. On Aug 4, the fund committed a fresh $400 million to an undisclosed private company, on top of a $100 million stake taken the prior month, a $500 million deployment, that reads as his own confidence signal. His investor letter framed the moment as corrective: “We took the steps that were necessary to fight another day. But our fund must always be structured such that we can take a loss and fight another day. I will make it my mission to ensure that we learn the necessary lessons from this experience.”
Why Silicon Valley Isn’t Running
Logan Bartlett of Redpoint Ventures captured the mood: “There is such a thing as the archetype of a hero,” and “There is a movement rallying around Leopold Aschenbrenner.” Silicon Valley rewards being right about technological direction and treats a leveraged wipeout as tuition. Wall Street rewards returns while protecting principal and treats the same event as disqualifying. Aschenbrenner is being underwritten on conviction rather than track record.
The Skeptical Read
He had no prior experience running institutional money before assembling one of the largest AI-focused funds. Running 400% leverage on concentrated, volatile AI infrastructure names while holding illiquid private stakes that cannot be sold to meet margin is a structural mismatch. Retail copy-traders who followed the positions absorbed the drawdown without access to the private-stake upside.
The signal to watch is whether Situational Awareness reopens to outside capital in the next quarter. If Aschenbrenner compounds from a $10 billion base with the private book intact, Silicon Valley’s willingness to underwrite conviction over track record gets vindicated. If he doesn’t, this is the first act of a cautionary tale about mixing venture-style bets with margin.
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