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AI Hedge Fund Sinks $35B, Citadel Takes Over Positions

8/4/2026

Summary

Story summary

Situational Awareness, led by 25-year-old Leopold Aschenbrenner, lost about $35 billion in late July 2026.
The loss resulted from heavy leverage on a long AI-infrastructure, short-software bet that backfired when AI stocks fell over 30 percent, driving a 67 percent loss.
After the forced sale, Citadel bought many of the fund’s public positions, stabilizing AI equities.
Aschenbrenner told Bloomberg the fund will unwind most public holdings, remove leverage, and stay focused on AI.

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Story summary

Situational Awareness, led by 25-year-old Leopold Aschenbrenner, lost about $35 billion in late July 2026.
The loss resulted from heavy leverage on a long AI-infrastructure, short-software bet that backfired when AI stocks fell over 30 percent, driving a 67 percent loss.
After the forced sale, Citadel bought many of the fund’s public positions, stabilizing AI equities.
Aschenbrenner told Bloomberg the fund will unwind most public holdings, remove leverage, and stay focused on AI.