The SEC has sent subpoenas to some of the largest Wall Street banks over their dealings with Situational Awareness, an AI hedge fund that nearly collapsed this summer. Regulators asked Bank of America, Citi, Goldman Sachs and JPMorgan Chase for trade timing data and lender communications, according to a regulatory filing.
A $30 billion bet gone wrong
At its peak, the fund ran more than $30 billion and borrowed tens of billions more. But its strategy turned volatile in late July. AI names dipped while traditional tech stocks the fund had shorted climbed, triggering margin calls and a portfolio fall of about 67%.
Behind the collapse was a shift in positioning. The fund's protective put options, worth $8.5 billion in March, had largely disappeared by June 30. They were replaced by $12.5 billion in outright long positions. When the market moved against those bets, the fund didn't have the downside cushion it once did.
What the subpoenas target
The subpoenas ask for records that could show exactly when the fund's trades were placed and how its lenders managed the relationship. The banks named as major counterparties — Bank of America, Citi, Goldman Sachs and JPMorgan Chase — are among the fund's biggest creditors, according to the filing.
The fund isn't accused of wrongdoing, and the SEC probe may never produce a formal case. But the subpoenas show the investigation is active and expanding.
A 24-year-old founder and a mining-heavy book
Situational Awareness was founded about two years ago by Leopold Aschenbrenner, a 24-year-old former OpenAI researcher. The fund grew quickly, but its bets became increasingly concentrated in crypto miners. Mining stocks grew to a quarter of the fund's book, reaching $1.99 billion in the final 13F filing, with positions in Core Scientific, Riot Platforms and IREN.
Citadel stepped in to buy the public book at a roughly 10% discount. It then cleared the miner overhang through nearly 100 block trades, unwinding what could have been a messy position.
JPMorgan CEO Jamie Dimon has separately warned that margin debt is at record levels, a caution that echoes the kind of leverage that built up inside this fund.
What's left
The fund still holds a stake in Anthropic, the AI company now weighing a public listing. That stake could be one of the few assets left after the sell-off.
Anthropic's decision on a listing would be the next major development for the fund, and it may also draw more attention from regulators as they trace the money.
