Ken Griffin's Citadel purchased a heavily discounted portion of Situational Awareness's public equities portfolio on July 30, 2026.
The AI-focused hedge fund suffered catastrophic losses from tumbling semiconductor stocks and mounting margin calls.
>>> Arsenal Targets Vinicius Jr Amid Real Madrid Contract Stagnation
The California-based fund, managed by 24-year-old former OpenAI researcher Leopold Aschenbrenner, saw its assets collapse from a peak of $45 billion to approximately $10 billion, according to Reuters and CNBC.
With leverage reported up to 400 percent, the portfolio lost 67 percent of its value in July.
This forced the liquidation of hard-hit holdings like SK Hynix and CoreWeave.
Citadel executives worked through the night to analyze the troubled fund's $16 billion public equities book before completing the transaction.
The intervention adds to Griffin's history of rescue operations, having previously absorbed positions from failing entities like Enron, Sowood Capital, Amaranth Advisors, and Melvin Capital.
The downturn marks a sharp reversal for Aschenbrenner, who gained Silicon Valley prominence after publishing a 165-page AI manifesto in June 2024.
He subsequently raised $100 million for the fund that November.
Despite racking up gains exceeding 1,000 percent since its inception, the fund drew criticism from Wall Street figures regarding Aschenbrenner's lack of prior money management experience and his past employment at the collapsed cryptocurrency firm FTX.
Market participants noted that the high leverage made the sudden unwinding predictable during a short-term market correction.
"A lot of people saw this blow-up as a matter of not if, but when," said Jerry Diao, who runs a Wall Street coaching firm.
