Some investors in the Situational Awareness hedge fund, which heavily bet on artificial intelligence before experiencing significant investment losses, had raised concerns about the fund's high-risk strategies and communications prior to its downfall. The fund, which grew to $45 billion under the leadership of 24-year-old Leopold Aschenbrenner, attracted significant backing from prominent figures in Wall Street and Silicon Valley.
Investors included Neil Mehta, co-founder of Greenoaks; Dan Sundheim, founder of D1 Capital Partners and a SpaceX shareholder; Gaurav Kapadia's XN foundation; and Feroz Dewan, former head of public equities at Tiger Global Management, according to The Wall Street Journal. Aschenbrenner, who lacked prior professional investing experience, built the substantial fund with leverage concentrated on AI bets.
Prior to the crisis, some backers reportedly grew frustrated and warned Aschenbrenner about the dangers of his strategy. Discontent also arose over what was perceived as poor communication from Aschenbrenner, who, unlike most hedge funds that provide monthly performance updates, only disclosed returns quarterly. The fund's substantial borrowing to finance its AI investments led to difficulties when several holdings sharply declined in value last month, prompting investors to seek redemption.
To stabilize the fund, Situational sold a majority of its public stock portfolio to Ken Griffin's Citadel. While large hedge funds typically attract institutional investors like pension plans and endowments, Situational drew a significant number of wealthy individuals, partly due to institutional apprehension about allocating capital to a manager with a limited track record.
Notable investors also included Stripe co-founders Patrick and John Collison, Meta AI leads Daniel Gross and Nat Friedman, and Jane Street, a trading firm that infrequently allocates capital to external managers. The Laniakea Charitable Foundation, whose president Matthew Wage is a Jane Street trader, and the AI-focused Good Forever Foundation also provided capital.
An advisory firm, Aksia, had flagged risks in 2025, noting in a document reviewed by The Journal, "may want to be wary of hubris leading to risk management issues, particularly if the use of leverage is indeed significant." Aschenbrenner, in fund documents, outlined his aggressive strategy, stating there were "no limits on the types of securities in which [Situational Awareness Limited Partnership] may take positions on behalf of its clients, the types of positions that it may take, the concentration of its investments or the amount of leverage that it may use."
Aschenbrenner launched his fund in 2024, initially seeing success with stock picks in semiconductor companies like SK Hynix and Sandisk, earning him the nickname "the Nostradamus of AI." Despite recent setbacks, Situational remains up 80% for the year and holds private investments in companies such as Fluidstack, MatX, and a multibillion-dollar stake in Anthropic. The fund is reportedly still among the top 50 hedge funds in the U.S., with its prime brokers continuing to support the firm, according to sources.