Situational Awareness lost 67 percent of its portfolio value in July. Now it has lost one of its main lenders as well.
JPMorgan has told the hedge fund that it is ending their lending relationship, according to Reuters. The fund was founded in 2024 by Leopold Aschenbrenner, a former OpenAI researcher, and had grown fast on bold bets on AI-related companies.
How the fund got here
A global rout in chip stocks set off margin calls and laid bare how heavily leveraged the positions were. Reuters reported that the fund sold most of its public equity holdings to Citadel to raise cash, and that the losses had nearly brought it down.
Aschenbrenner has been frank with investors. The fund, he told them, had come “closer to permanent capital impairment than is acceptable.” He still expressed optimism about the fundamentals of the portfolio.
Who is still lending
JPMorgan is not the only bank that dealt with the fund. Goldman Sachs, Citi and Bank of America remain active brokers, and the fund has recently begun working with Clear Street.
Regulators have also taken an interest. The U.S. Securities and Exchange Commission has sent subpoenas to Wall Street banks involved with Situational Awareness, seeking information on its trades and its use of leverage.
