Leopold Aschenbrenner’s hedge fund, Situational Awareness, has been forced to liquidate its entire portfolio of public stock holdings following significant losses, sources familiar with the situation told CNBC. The fund, once valued as high as $45 billion earlier in July, experienced steep declines stemming primarily from investments in AI infrastructure companies such as SK Hynix. Additionally, the fund’s short positions in software stocks including Adobe moved against it, exacerbating financial pressures. To manage margin requirements and orderly sell-offs, prime brokers like Bank of America, Goldman Sachs, and JPMorgan Chase have been actively involved in facilitating the fund’s asset sales.

Ken Griffin’s Citadel hedge fund reached a deal to acquire the publicly traded assets of Situational Awareness amid this forced unwind. The fund’s losses have been sharp and rapid, rattling investors who had closely followed Aschenbrenner after his departure from OpenAI in 2024. Aschenbrenner quickly rose to prominence as a leading figure in AI investment by betting heavily on the rapid expansion of computing power, semiconductors, and data infrastructure required to support advanced artificial intelligence technologies. However, recent market movements have severely tested this thesis, leading to a major sell-off of key holdings.

Situational Awareness’s largest positions at the start of the year had included companies like Nebius Group, Sandisk, Micron, and CoreWeave, all of which have seen their stock prices drop more than 35% in July alone. These losses highlight the volatility and risks on the frontier of AI-related infrastructure investments. The firm’s attempts to sell stakes, including a reported but unconfirmed block sale of its Anthropic shares, underscore the urgent need to raise cash amid margin calls. A spokesman for Situational Awareness denied that it was marketing its Anthropic stake.

This liquidation unfolds at a difficult personal time for Aschenbrenner, who is reportedly preparing for his wedding this weekend. The 25-year-old investor, who gained initial acclaim through essays forecasting the massive infrastructure needed for AI growth, faced a controversial exit from OpenAI after being fired over alleged improper disclosures—a claim he disputes. The dramatic unwinding of his fund’s positions marks a significant turning point for the AI investment landscape, as major players reassess the viability of long-term bets on AI-driven hardware companies in the face of sharp market corrections.