Up 439%, Then Margin-Called: Did Leopold Aschenbrenner’s Situational Awareness Actually Blow Up?

Situational Awareness made 439% in six months. Then margin calls took its entire stock book in one trade. Ken Griffin’s Citadel bought it.

A quarter of that fund’s last reported stock holdings were Bitcoin miners. That was not an accident, and it is why crypto investors are reading this story closely.

Who Is Leopold Aschenbrenner?

OpenAI hired him for its Superalignment team in 2023 and let him go in April 2024. He has said he was pushed out for raising safety concerns.

In June 2024 he published an essay series called Situational Awareness. Its central claim was blunt.

“AGI by 2027 is strikingly plausible,” Leopold Aschenbrenner, in his essay series Situational Awareness, June 2024.

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AGI means software that matches humans at most tasks. But the essay did more than predict it. One chapter argued the real bottleneck would be physical. Power contracts, transformers and electricity supply, not chips.

He then built a hedge fund on that idea. Its first stock disclosure, covering December 2024, listed six holdings worth $254.8 million.

Every one was a power or chip company. Not one was crypto. That changed quickly.

What Happened to Situational Awareness This Week

July went badly. The fund owned memory chip makers like SK Hynix, which fell hard in the AI memory stock selloff.

It had also bet against software firms such as Adobe. That trade pays off when a stock drops. Those shares rose instead. The wider market went the same way. The Nasdaq-100 fell 10% from its early June peak.

Borrowed money turned a bad month into a forced one. The fund had used loans to hold more stock than its own cash could cover.

When prices fell, its lenders wanted more money behind those loans. That demand is a margin call.

CNBC named Bank of America, Goldman Sachs and JPMorgan Chase as the brokers involved. It also reported the fund had grown to $45 billion by the start of July.

Then it unwound every public stock position, CNBC said. Griffin’s Citadel hedge fund agreed to buy them. Millennium Management and Jane Street looked and passed, Bloomberg reported.

Where Do Bitcoin Miners Come In?

Crypto readers mostly missed this part. Situational Awareness became one of mining’s larger shareholders, and it happened fast.

Big US funds must list their stock holdings every three months on a form called a 13F. Five exist for this fund. Read in order, they show a bet being built.

The latest filing lists 29 holdings worth $5.52 billion. Miners and their data center arms make up $1.38 billion of it.

Core Scientific was the largest at $418.7 million. IREN came next at $328.6 million, then Applied Digital at $278 million.

Cipher Mining, Riot Platforms, Hut 8, WhiteFiber, Bitdeer, CleanSpark and Bitfarms made up the rest.

The whole disclosed book grew nearly 22 times in a year. The mining share went from nothing to a quarter of it.

So the AGI fund became a mining fund by design. His essay said the bottleneck was power. Miners own power, land and cooling, which is why miners became AI powerhouses.

There is a catch for shareholders. Anyone holding these stocks in July shared the trade with a fund facing margin calls. No mining company knew, so none of them said so.

Did Citadel Engineer This?

One theory spread fast. It says Citadel scared the market about rate hikes, waited for Leopold to break, then bought his stocks cheap.

The first part is true. Frank Flight, who runs macro strategy at Citadel Securities, published a note on July 27. He wrote that he now expected a rate hike at the July meeting.

Bloomberg reported the call added to market nerves. Two days later, a Griffin firm bought the stock book.

Four things break the theory.

• First, there are two Citadels.

Citadel Securities buys and sells stocks for other people. Citadel is the hedge fund. They are separate firms.

• Second, Flight had company.

PGIM and Wrightson ICAP also called for a hike. Bond veteran Harley Bassman wanted one twice as big.

• Third, the fear came first.

Bloomberg tied it to oil prices rising after the US and Iran clashed again, plus a strong job market.

• Fourth, the Fed did not hike.

It held rates steady, and three of its 12 voting members wanted a quarter-point rise.

That last detail matters. It was the first time since September 2016 that three officials dissented in the same direction. The pressure to raise rates was real, and it sat inside the Fed.

What Nobody Can Answer Yet

Did Citadel get a bargain? Nobody outside the deal knows. Neither firm will say what it paid.

Some think the forced selling mattered anyway. On CNBC, Jim Cramer argued it looked like a clearing event that could mark a bottom for the AI trade.

The tape says something simpler. Microsoft reported strong results on Wednesday night and rose about 15%.

Chip stocks jumped the next day. One big chip index rose 6.7% and snapped a five-day losing streak.

One block trade does not move a whole chip index. An earnings report can.

Six days before all of it, Aschenbrenner had told his investors to add money.

“PS. At times we call out opportunities that seem like a particularly good time to add funds, if you have been waiting for one,” Leopold Aschenbrenner, in the July 24 investor letter as reported by the Financial Times.

He got the direction right. He just did not own the stocks anymore.

The fund is not dead. It still holds private stakes, including Anthropic, which filed confidential IPO paperwork on June 1.

Miners spent 10 years being called a curiosity. It took one AI fund’s margin call to make them matter.

The post Up 439%, Then Margin-Called: Did Leopold Aschenbrenner’s Situational Awareness Actually Blow Up? appeared first on BeInCrypto.

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