Nick Tomaino, founder of 1confirmation, said the crisis surrounding AI investment fund Situational Awareness LP has exposed a persistent problem in the investment world: many so-called elite investors and pools of “smart money” lack basic risk judgment. In comments posted on Aug. 3 and cited by PANews, Tomaino said he does not know all the details of the episode and does not want to comment on the specific liquidation process. Still, he argued that the deeper issue is familiar. In his view, many investors become driven by wealth and attention, then lose sight of facts, risks, and their assessment of other people. Tomaino compared the situation with the collapse of FTX, saying many people could sense something was wrong after only brief interactions with the founder, yet large amounts of capital kept investing and endorsing the company because they were chasing returns and market narratives. He said a similar pattern appeared around Situational Awareness, where investors backed a grand narrative, supplied capital, and amplified publicity, only for the fund to run into trouble after high-risk bets met a market reversal.
Nick Tomaino, founder of 1confirmation, said the crisis involving AI investment fund Situational Awareness LP points to a long-running problem in the investment world: many so-called elite investors and pools of “smart money” lack basic risk judgment, according to PANews on Aug. 3.
Tomaino said he does not know all the details of the incident and does not want to comment on the specific liquidation process. Even so, he argued that the deeper issue is that many investors are driven by wealth and attention and gradually stop focusing on facts, risk, and their judgment of other people.
FTX comparison
He pointed to the collapse of FTX as an example, saying many people were able to sense warning signs after only brief contact with the founder. Even so, a large amount of “smart money” kept investing in the company and backing it because investors were chasing returns and market narratives.
Tomaino said he sees a similar pattern in the case of Situational Awareness and the investor circles that supported the fund. The same type of investors, he said, chased a sweeping narrative, provided capital, and pushed promotion around the fund. It later fell into distress after high-risk bets ran into a market reversal.
He called on industry participants to learn from the episode and avoid repeating what he described as a cycle of chasing hot themes, ignoring risk, and getting hit together when trades go wrong.
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