US regulators have launched an investigation into the near collapse of a hedge fund run by the man called the “golden child” of the AI boom.
The Securities and Exchange Commission (SEC) has reportedly sent subpoenas to several major Wall Street banks, seeking details on the timing of trades by Situational Awareness, an AI-focused hedge fund.
The fund, founded by 24-year-old Leopold Aschenbrenner, was forced to conduct a fire sale of assets earlier this month after a sharp market downturn triggered a 67pc fall in its value.
By the end of June, his $20bn (£15bn) hedge fund had made a 439pc profit in six months, thanks to bets on a string of AI companies such as Anthropic, SK Hynix and Nebius.
However, Mr Aschenbrenner’s fund slumped after a steep correction in semiconductor stocks, such as South Korean chipmaker SK Hynix, which plunged 42pc from a record high in June.
Situational Awareness sold the bulk of its portfolio to US hedge fund Citadel, under pressure from Wall Street lenders whose money it was using to make big bets on AI stocks.
The SEC had started looking into the fund’s communications with lenders about its use of leverage for trades, sources told Reuters. The New York Times first reported the subpoenas.
Regulatory filings show the hedge fund is a client of Goldman Sachs, JPMorgan, Citigroup and Bank of America.
A Situational Awareness spokesman said: “It is to be expected that regulators would closely examine any funds that are high profile, produce significant returns or have particularly dramatic drawdowns.
“We are a highly regulated business and will cooperate to the fullest extent with any regulatory request.”
An SEC spokesman declined to comment.
Mr Aschenbrenner’s Situational Awareness, which has not been accused of wrongdoing, was thrown into crisis after the worst month for tech-focused hedge funds since 2008.
A plunge in the value of US tech giants and Asian semiconductor groups led tech funds to drop by 7pc in July, according to data from Hedge Fund Research.
Mr Aschenbrenner’s highly leveraged fund is now a fraction of its former size.
It marks a dramatic fall from grace for the German-born Mr Aschenbrenner, who spent a year at OpenAI, the maker of ChatGPT, before being sacked in 2024. He was accused of leaking internal information – a claim he denies.
The AI investor had been labelled the “Nostradamus of AI” for his apparently prescient AI trades as the market surged earlier this year.
The crisis at his fund happened days before Mr Aschenbrenner was poised to marry Avital Balwit, the chief of staff at Anthropic, the creator of Claude chatbot.
