When the week began, Leopold Aschenbrenner was preparing for his wedding. The plan was for a multiday celebration in Carmel, a seaside town in Northern California, with the ceremony at a Tuscan-style villa and the send-off at a spa in the forest. There would also be a pre-wedding colloquium to discuss ideas in panels and breakout sessions. The couple’s only request: no gifts.

The 24-year-old investor had amassed a fortune by promising he could see into the future, building a $45 billion investing powerhouse that primarily bought stocks in the AI trade. For months, the holdings of his hedge fund Situational Awareness shot up in value, as did Aschenbrenner’s standing in the upper echelons of San Francisco’s elite.

But by the time guests began to arrive, his fund was unraveling—and Wall Street was closing in.

Aschenbrenner borrowed too much money to make his AI bets, leaving him at risk as they faltered. With the value of his portfolio tumbling, he scrambled to raise cash to satisfy his lenders, appealing to some of the largest hedge funds and selling billions of dollars in holdings in a fire sale to Ken Griffin’s Citadel.

Aschenbrenner first made his way to California, after graduating from Columbia University in 2021 at age 19. An early convert to principles of the effective altruism movement, he began working for the philanthropic arm of Sam Bankman-Fried’s crypto exchange FTX before joining OpenAI, where he worked in the niche field of AI superalignment, focused on ensuring the technology didn’t go rogue and destroy humanity.

After getting fired for leaking what OpenAI considered sensitive information to Holden Karnofsky, the husband of an Anthropic executive, he published a 165-page essay, “Situational Awareness: The Decade Ahead,” that foresaw the path of AI’s development—and went viral.

The manifesto helped him raise money for his new hedge fund and vaulted him into prominence. He is marrying the chief of staff to Anthropic CEO Dario Amodei, and lives in a San Francisco mansion not far from OpenAI CEO Sam Altman. His investors include top AI executives at Meta, and Patrick and John Collison, the brothers who co-founded payments firm Stripe.

Aschenbrenner piled into concentrated positions in AI stocks, aided with debt and other tactics to supersize the bets. His early success turning a few hundred million dollars into $45 billion earned him a cult following in online circles, where his firm’s routine regulatory filings were pored over like scripture. His sweaters and dark turtlenecks added to his reputation as a reclusive oracle of AI.

But this week, desperate for cash, Aschenbrenner struck a deal late Wednesday night to unload his prize—a giant $3.5 billion stake in Anthropic to a group of investors led by Greenoaks and Sequoia Capital. By the morning, he backtracked.

Later that day, Aschenbrenner wrote to his investors that the firm had instead sold a portion of their public stocks in order to pay off the money it had borrowed, allowing it to keep its shares in private companies. His fund was down 67% on the month, he wrote. “These dynamics are essentially similar to a bank run: vulnerability begetting more vulnerability,” he wrote.

In 2024, when Aschenbrenner made a rare public appearance on the podcast hosted by his friend Dwarkesh Patel, he was asked toward the end of a conversation that lasted 4½ hours about his investment plans.

“Presumably you’ve thought about the ways in which these kinds of things can blow up,” Patel said. “There’s a lot of interesting business history books about people who got the thesis right but timed it wrong.”

“Obviously,” Aschenbrenner said, “not blowing up is task No. 1 and 2.”

Aschenbrenner grew up in Berlin and came to the U.S. for college. He started an effective-altruism club and graduated as valedictorian. He went to work at the FTX Future Fund with his future wife, Avital Balwit. They quit with the other staffers as FTX collapsed. Aschenbrenner’s time with Bankman-Fried’s charitable arm does not appear on his LinkedIn page, where he once listed his nearly perfect LSAT score.

In 2023, he joined OpenAI. In 2024, he was fired. While at the company, he began working on the manifesto that he would publish online after he left. Called “Situational Awareness,” the essay proclaimed that AI would soon become more powerful than humans and that most of the world hadn’t woken up to this reality.

“Right now, there are perhaps a few hundred people, most of them in San Francisco and the AI labs, that have situational awareness,” he wrote. “Through whatever peculiar forces of fate, I have found myself among them.”

He launched his hedge-fund firm shortly after with Carl Shulman, another AI intellectual steeped in the world of effective altruism. Graham Duncan, a well-known investor who organized the Sohn Investment Conference, signed on as an adviser.

Shulman, who had worked at a hedge fund run by Peter Thiel, provided a more professional imprimatur to Situational. The duo charged a steep price for access to the fund. The minimum check size was $25 million for some, and many investors agreed to lock up their money with him for years.

By all accounts, Aschenbrenner was living a charmed life in San Francisco.

He had moved into a mansion in the city’s patrician Nob Hill neighborhood, entertaining an eclectic set of guests who made their way up the home’s steep driveway to enjoy its sweeping views.

At his firm’s headquarters, he hosted Friday happy hours with Patel, the podcaster. The duo worked out of the same office and often invited leading researchers from OpenAI and Anthropic. Situational and other companies share two floors, an outdoor patio with couches and heat lamps, and a gym with Situational Awareness-branded weights on the squat rack.

Earlier this year, podcaster Tim Ferriss called Aschenbrenner “the Nostradamus of AI,” telling listeners that his viral paper was “as close to clairvoyant as you could possibly be.”

For a time, Aschenbrenner’s bets did look prescient. The firm had temporary stumbles, including a loss in early 2025 after the release of a low-cost AI model from Chinese startup DeepSeek prompted a selloff in Nvidia and other AI-adjacent stocks. Situational quickly recovered, though, and ended the year up.

The fund had gained about 270% after fees this year through May. At that point, it was up more than 1,000% after fees since inception. It had ballooned to well over $20 billion under management, reaching the size of other well-known hedge funds that took decades to build.

Situational attracted an investment from Jane Street, the big quant-trading firm that rarely allocates capital to outside money managers. In recent months, Situational hired more seasoned executives who had worked at places like Goldman Sachs, Sequoia Capital’s hedge-fund affiliate and Citadel.

Situational told prospective investors that it would invest up to 30% of the fund in private companies. It would mostly make concentrated bets on AI winners in the stock market across sectors like energy, infrastructure, software and semiconductors. And it would borrow money to amplify positions and hedge by shorting some stocks viewed as AI losers, but it was meant to be heavily exposed to market swings.

Situational quickly signed up a roster of the biggest banks, including Goldman Sachs, JPMorgan, Citigroup and Bank of America, to finance and execute the firm’s trades, according to regulatory filings. Earlier this year, the firm was hungry for more borrowed money to boost its buying power and reached out to other banks to try to line up more financing, people familiar with the outreach said.

As recently as early July, everything seemed to be going right. It was chosen to play an anchor role in the standout $27 billion U.S. listing of shares of South Korean chip maker SK Hynix.

For every $1 of capital, Situational would upsize its positions by borrowing an additional $3 to $4, or sometimes more, people familiar with the matter said, well above the leverage used by funds trading such volatile kinds of shares. It also used options to amplify its returns. That meant that even small declines in individual names could have big impacts on Situational’s portfolio.

But by the middle of the month, investor sentiment around the AI trade began to shift. Advances in cheaper, open-source Chinese models spooked traders and called into question where the value lies in the AI supply chain. Situational’s lenders began examining their exposure to the firm more closely and kept daily tabs on swings in performance.

Over the past week, traders at major hedge funds and other firms began sharing information about Situational’s exposure, with some placing short bets against its top holdings, hoping to profit as Aschenbrenner sold his positions​ to raise cash, according to two people close to the situation.

The short bets by the rivals weighed on Situational’s portfolio. Meanwhile, tech shares like SK Hynix were sliding. Over the three trading days ending Tuesday of this week, hedge funds reduced their positions at a scale not seen in three years, according to Goldman Sachs.

All that leverage resulted in deep losses. As they intensified, banks issued margin calls demanding additional collateral to stand behind their loans of stock. Situational dumped stocks to raise cash and asked investors for additional capital. It met its margin calls as recently as Wednesday.

It was also exploring more drastic ways to shore up its finances. Aschenbrenner and colleagues discussed selling private investments, such as Anthropic, paring its portfolio of public shares, or taking other steps, according to people familiar with the matter.

On Wednesday, the Collison brothers spent several hours at Situational’s offices, people familiar with the matter said.

Situational spoke to its banks and other hedge funds about selling a cross-section of its portfolio in one fell swoop.

Citadel, the $71 billion firm founded by Griffin, has a history of stepping in to buy assets from troubled hedge funds, including when it bought assets from hedge funds Amaranth and Sowood nearly two decades ago at fire-sale prices.

Once they became aware of the situation at Situational, Citadel executives reached out to Aschenbrenner, saying that the firm could be helpful i​f he needed ways to raise cash. With Griffin in London, the Citadel team began negotiating with Aschenbrenner and his team, holding talks that began late in the day on Wednesday and intensified in the evening.

Soon, another hedge fund, Israel “Izzy” Englander’s giant Millennium got involved: Late Wednesday night, Millennium executives began negotiating with Situational’s team, as well, discussing its own offer for the fund’s shares, with Englander weighing in by phone from Europe.

Situational’s talks with Citadel and Millennium went well past midnight on Wednesday night.

​Citadel landed on a deal just before the opening of trading Thursday morning​, agreeing to buy the vast majority of Situational’s public stock portfolio. ​Citadel received a discount of more than 10% ​t​o the market value of those shares, according to someone close to the matter​.

For Griffin and Citadel, the ​deal proved a coup—at least for a day. Many of the semiconductor and other stocks the fund purchased soared on Thursday, as AI and other shares climbed.

For Aschenbrenner, the deal meant something else: a way to stay alive. Shorn of most of its public equities, Situational is left with a slimmed-down portfolio of stocks and stakes in startups valued at more than $10 billion.

In a letter to his investors Thursday, as wedding guests began to arrive in Carmel, Aschenbrenner said he would focus on changes to his portfolio management and risk teams in the coming weeks “to ensure a higher level of resilience going forward.”

“I take full responsibility for these events,” he wrote.

https://www.wsj.com/finance/leopold-aschenbrenner-situational-awareness-ai-fund-597633d3

(http://www.autoadmit.com/thread.php?thread_id=5888347&forum_id=2...id#50038708)

What planet do these people come from

(http://www.autoadmit.com/thread.php?thread_id=5888347&forum_id=2...id#50038770)

They're showing up because they want the insider intel from Altman, Dario, and SBF. They want the scoop so he goes yeah come to my wedding and I'll dish.

What's crazy is both of them are in on this. They like this. They're giddy about the attention. It's like what 40 years ago was being a hot up and coming filmmaker. It's cachet. No one wants to be a cog in the machine. They want to be a Superstar.

(http://www.autoadmit.com/thread.php?thread_id=5888347&forum_id=2...id#50038817)