BlockBeats reported on Aug. 1 that Wall St Engine had revealed more details about the blowup at Leopold Aschenbrenner’s Situational Awareness fund.
According to the report, the market cooled sharply in mid-July. Falling prices in the fund’s holdings triggered daily monitoring and margin calls from banks including Goldman Sachs and Morgan. During that stretch, other hedge funds learned about the situation and shorted the positions, creating a loop of falling prices, margin pressure, forced sales, and additional downside. Aschenbrenner later compared the episode to a bank run.
Negotiations continued during his wedding in Carmel
By late July, Aschenbrenner was holding a multi-day wedding in Carmel, but he and his team were still negotiating through the night to keep the fund operating.
On the evening of July 29, Aschenbrenner reached a preliminary agreement to sell about $3.5 billion of Anthropic equity to a consortium led by Greenoaks and Sequoia.
The fund kept the private portfolio and sold public stocks instead
From the early hours of July 30 until before the market opened, Aschenbrenner changed that decision. He chose to retain the private portfolio and sell public equities instead.
Citadel and Millennium then negotiated with the fund team past midnight. Citadel ultimately struck a deal before Thursday’s open to buy most of the fund’s public equity investment portfolio at a discount of more than 10% to then-current market value.
The transaction allowed Situational Awareness to meet its margin requirements and avoid a formal default. After the deal was completed, related AI and semiconductor stocks rebounded on Thursday, and Citadel benefited.
Fund said July losses were about 67%, while the year was still up about 80%
Around July 31, 2026, Situational Awareness sent a letter to investors confirming a net loss of about 67% for July, while still posting a net gain of about 80% for the year.
Aschenbrenner said he took “full responsibility” for the episode. He also said the fund had fully removed bank leverage, would continue operating and investing in public markets, and would adjust its portfolio management and risk team.