Written by: Little Pie

Precursors are perceptive, precursors also die first.

July 30, 2026, is likely to be the most unforgettable day of Leopold Aschenbrenner's life.

A month ago, his fund, Situational Awareness LP, was the most dazzling new star on Wall Street. According to an investor letter seen by the FT, as of the end of June, the fund's net return in the first half of the year was 439%, making it one of the best-performing hedge funds of 2026, with total assets under management reaching a peak of $45 billion in early July.

On July 24, Leopold Aschenbrenner wrote a letter to his investors. In the letter, he acknowledged that his fund did not escape the recent sell-off in AI stocks. After writing this, he shifted the topic elsewhere: This is one of the most attractive buy windows since early 2025. At the end of the letter, there was a postscript inviting existing investors to add funds before August 1.

The money never arrived.

Before the market opened on July 30, three prime brokers—Bank of America, Goldman Sachs, and JPMorgan Chase—simultaneously sent margin call notices to Situational Awareness. The fund's public stock positions were leveraged about four times. That morning, the entire public stock ledger, both long and short positions, was transferred in a bulk transaction to Ken Griffin’s Citadel.

From the firing of OpenAI's super alignment team to penning a 165-page paper that shook Silicon Valley and Washington, to founding a fund that ballooned to $45 billion, and ultimately being forced to liquidate.

The entire process took him less than two years.

He is 25 years old this year. Five years ago, he was an undergraduate at Columbia University.

From OpenAI to Wall Street

Leopold Aschenbrenner was born in Germany, both of his parents are doctors, and he attended the Kennedy School in Berlin for high school. He graduated from Columbia University at 19 with dual degrees in Economics and Mathematical Statistics, serving as the student representative.

His legendary life narrative must begin in April 2024.

At that time, he was part of OpenAI’s super alignment team, working under Jan Leike and Ilya Sutskever. His job was to research how to ensure that future super AIs do not pose a threat to humanity. However, he increasingly felt that OpenAI’s safety measures had issues. He wrote a memorandum to the board, pointing out serious information security risks within the company, particularly the potential risks of foreign industrial espionage.

Then he was fired, with OpenAI citing "information leaks," which he denied.

Two months after leaving OpenAI, he wrote the lengthy piece "Situational Awareness" that made everyone in the AI field remember his name.

Two months later, in June 2024, he published a 165-page paper titled "Situational Awareness: The Decade Ahead."

This paper went viral in Silicon Valley, Washington, and Wall Street simultaneously. The core argument was simple: AGI (Artificial General Intelligence) would arrive around 2027, and from 2028 to 2030, it could recursively self-improve to superintelligence. The bottleneck is not algorithms but physical infrastructure—electricity, transformers, transmission lines, cooling systems, and data center land.

Ivanka Trump, the daughter of the U.S. President, publicly praised this paper. Stripe founders Patrick and John Collison, former GitHub CEO Nat Friedman, and former Y Combinator partner Daniel Gross pooled $225 million to help him launch a hedge fund named Situational Awareness LP, the same name as his paper.

He also invested nearly all of his personal net worth into it.

Path to Deification

From late 2025 to the first half of 2026, Leopold's fund soared like a rocket.

Starting with $225 million, by early July 2026, the assets under management peaked at $45 billion, expanding 200 times.

His holding logic was laid out in the paper: since the bottleneck is electricity, whoever controls electricity, land, and cooling facilities is wrongly priced AI infrastructure.

This reasoning led him to a place that most AI investors would avoid: Bitcoin miners.

After the halving in April 2024, margins for traditional mining were continuously compressed, leading many mining companies to convert their facilities into hosting sites for AI and high-performance computing. They had electricity contracts, land, and buildings on their balance sheets, but the market was still valuing them through the mining framework.

By March 31, 2026, the value of the fund's U.S. stock holdings was $5.52 billion across 29 targets. The miners and their data center businesses collectively accounted for about $1.38 billion, roughly a quarter of the entire ledger, with Core Scientific being the largest at $418.7 million, followed by IREN at $328.6 million, and Applied Digital at $278 million. The top five holdings included CoreWeave, Bloom Energy, Intel, Lumentum, and Core Scientific, collectively accounting for about 68% of the stock ledger.

These companies' stock prices skyrocketed amid the AI infrastructure boom.

The other half of the ledger was short positions.

The same 13F revealed about $8.46 billion in nominal-sized put options, centered on names like the VanEck Semiconductor ETF, NVIDIA, Oracle, Broadcom, AMD, Micron, and TSMC, making up 62% of the total $13F declaration of $13.68 billion.

The vast majority interpreted this as: he was shorting chips.

The value of the options in the 13F refers to the value of the underlying securities, not the actual money he spent; behind the nominal size of $8.46 billion, the actual cash may only be a few percentage points of that. The 13F also does not disclose strike prices, expiration dates, or hedging relationships, so from this document alone, no one can differentiate whether a put option is for directional shorting or for hedging long positions.

The actions before the crash reveal more of the situation.

According to unusual_whales’ analysis, the latest 13F update showed he was increasing positions in chips, building new positions in TSMC, Intel, ASML, NVIDIA, and Corning, while simultaneously adding call options on Micron, TSMC, and SanDisk, and reducing holdings in Core Scientific and Bloom Energy, indicating that the true short positions were in software stocks.

By the end of June 2026, this "long AI infrastructure, short software stocks" fund had a net return of 439%, and his positions became the "AI infrastructure textbook" on Wall Street, with retail investors chasing 13F purchases and analysts regarding his positions as a barometer. An analyst from a large tech fund mentioned in an interview with Fortune, "When the market is tense, colleagues will say 'Leopold said it’s fine,' and then no one sells."

He became the prophet of the AI era, a 25-year-old prophet.

Cracks and Collapse

A month later, a double strangulation arrived.

In July, the long side he was betting on started to fall. SK Hynix dropped nearly 40% from its June high, NVIDIA fell below $200, Micron and CoreWeave were all heavily impacted. The short side he was betting against began to rise, with software stocks like Adobe soaring due to anticipated AI application rollouts.

The dual slaughter combined with leveraged liquidation caused Leopold's fund to suffer huge losses, leading the three major prime brokers to intervene and assist in meeting margin requirements, but the margin calls were like an avalanche and could not be stopped.

He tried all other methods.

The letter dated July 24 invited old investors to add funds. He had talked with lenders. He also explored selling part of his positions directly to individual investors. Millennium and Jane Street both evaluated the ledger and chose not to proceed, with Jane Street itself being an investor in the fund.

In the end, all public stocks were liquidated, with only one buyer: Citadel, Ken Griffin's hedge fund. The price was not disclosed, but the market widely speculated it was at a "fire sale price"; positions that were forced to be sold cannot have a good price.

It only took a month to go from a return of 439% to liquidating all stock positions.

Hunt?

At this point, the story was originally just about a genius fund manager being crushed by leverage and market volatility. But a timeline began circulating on X, making the whole event less straightforward.

The timeline is as follows:

On July 27, Bloomberg reported that Frank Flight, the macro strategy head at Citadel Securities, predicted in a client report that the Federal Reserve would unexpectedly raise interest rates by 25 basis points at the meeting on July 29. He was among the few major institutional strategists making such a prediction, with Polymarket showing only a 24.3% probability of a rate hike.

Frank Flight's rationale was not based on a specific inflation data point, but rather on credibility. Kevin Warsh (the newly appointed Federal Reserve Chair nominated by Trump) needed an unexpected rate hike to bolster policy credibility and decisively end the era of forward guidance.

From July 28 to July 29, this prediction quickly fermented within the trading circle. The rumor of a rate hike acted as a detonator, igniting already tense market sentiment. Tech stocks plummeted first, with NVIDIA, AMD, TSMC, and SK Hynix all suffering significant losses. Leopold's fund, already teetering under the dual strangulation, saw panic selling triggered by the rate hike rumor become the last straw that broke the camel's back, completely breaching margin levels.

On July 30, Citadel took over the entire public stock portfolio that Leopold had liquidated.

Ultimately, the Federal Reserve did not raise interest rates on July 29. But the market no longer cared; the damage caused by the rumor was already done, and Leopold's positions had been forcibly liquidated.

This timeline was shared by countless people on X. The core question was: The macro strategy head of Citadel Securities issued a rare rate hike prediction two days before the Federal Reserve's decision, and a rumor directly triggered a tech stock sell-off, leading to Leopold's margin call, which was ultimately picked up at a low price by Citadel (the hedge fund division).

Citadel Securities and Citadel Hedge Fund are two independent legal entities that share founder Ken Griffin but operate independently. Citadel Securities is a market maker, handling about a quarter of U.S. stock trading volume and 35% of retail orders; it can see real-time order flow. As the macro strategy head of Citadel Securities, who is Frank Flight's client report aimed at? Does he have the ability to see who in the market is being forced to sell? A single rumor can trigger a sell-off of tens of billions; is the precision of this rumor too coincidental?

These questions have no answers. But discussions on X became increasingly heated. Some said it was a perfect hunt: first leak the interest rate signal to induce market panic, forcing leveraged positions out, then scoop them up at low prices. Others argued it was merely a coincidence, asserting that Frank Flight's rate hike prediction was based on his independent judgment of Warsh's policies, and Leopold's margin call was due to his own dual losses and excessive leverage, with the rumor merely accelerating what was already bound to happen.

What is the truth? Is it coincidence, a hunt, or the brutal logic of the market itself?

It remains a mystery.

The Spark Remains

After news of Leopold's liquidation spread, the market's reaction was interesting.

Stocks considered most likely to fall surged across the board, with Nebius rising 26.3%, IREN increasing about 26%, CoreWeave climbing 21.8%, and Core Scientific up 21%... the entire AI sector, including storage, launched a strong counterattack.

CNBC host Jim Cramer offered his explanation before the market opened: once those needing to sell were cleared out, the bottom would emerge. He added that these individuals were not the only ones; the same batch of stocks also had many other similarly leveraged positions pressing them.

Market strategist Dan Niles had a similar perspective, referring to this round of forced liquidations as a cleansing, mentioning that the prime brokers handled it quite carefully to avoid a repeat of Archegos. In 2021, Bill Hwang's family office collapsed, resulting in a loss of about $5.5 billion for Credit Suisse, which was acquired by UBS in 2023. ZeroHedge even named this event Archegos 2.0.

Retail investors celebrated on X: "The prophet has fallen, and the bull market has begun."

His liquidation became a signal for Wall Street to bet on the bottom of AI.

This is quite ironic. He was once the most steadfast evangelist for the AI narrative, and in the end, he became the most brutal sacrifice to that narrative.

However, Leopold has not fallen, and the fund has not closed.

What was liquidated was only the public stock portfolio. Situational Awareness retained all private equity holdings, the largest of which is equity in Anthropic, valued at approximately $5 billion according to the FT. The company will continue to operate in the form of a private investment entity. There are reports stating it is looking to sell its stake in Anthropic, but a fund spokesperson denied this claim to CNBC.

One detail is that Leopold's fiancée, Avital Balwit, is precisely the chief of staff to Anthropic's CEO, Dario Amodei.

With Anthropic backing, the genius young man Leopold still has the potential to rise again.

Looking back, his fund's name "Situational Awareness" has now become the greatest irony.

He had situational awareness, but he lacked market awareness. Or rather, he had situational awareness, but no margin call awareness.

The long cycle is correct, the short cycle goes to zero, and on Wall Street, this is referred to as dying due to correctness.