A once-soaring AI hedge fund has gone from urging investors to buy the dip to unloading its public-market exposure. Citadel stepped in as the buyer — but reports of its own rapid selling suggest this was less a long-term rescue than a harsh repricing of an overheated trade.

Situational Awareness was founded in 2024 by former OpenAI researcher Leopold Aschenbrenner, who built its central bet around the infrastructure needed to scale artificial intelligence: chips, computing power, memory and energy. The wager initially looked spectacular. The fund returned 439% through June and reportedly reached as much as $45 billion in assets at its peak.¹

Then the AI infrastructure sell-off hit. Holdings including SK Hynix, Sandisk, Bloom Energy and Nebius Group each dropped more than 30% over the past month, as investors questioned whether enormous spending on AI was producing revenue quickly enough. Borrowing to enlarge the positions magnified the damage.¹

As recently as July 24, Aschenbrenner called the rout “one of the best buying opportunities since early last year” and sought fresh capital from investors. The hoped-for commitments did not arrive.¹ Within days, the fund sold its public-equity book to Ken Griffin’s Citadel, Axios reported, describing the transfer as the sale of “all of its public equities portfolio.”²

That account differs slightly from reporting that Citadel bought the “majority” of the portfolio, but the broader picture is the same: a leveraged investor was forced to shrink rapidly. Citadel had held several similar AI infrastructure bets already, giving it both familiarity with the assets and more capacity to wait through volatility.¹

Situational Awareness has retained its private investments, most notably an Anthropic stake reportedly valued at $5 billion. That leaves Aschenbrenner with a potentially valuable long-term claim on AI — but a bruising lesson from the public market: conviction can survive a crash; leverage may not.¹