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Wall Street Just Liquidated AI’s Boy Genius
The same mistake that wiped out Korean traders is reaching Wall Street.
Teeka Tiwari & Houston Molnar
August 03, 2026
I got married in June. On my list of worries the week of the wedding: Will guests like the food? Will the DJ get my family out on the dance floor? What if I forget how to speak when the officiant says, “Do you, Houston, take…”?
Not on my list of worries: Losing $35 billion (with a B) two days before the wedding.
That’s what just happened to AI’s boy genius, Leopold Aschenbrenner. His hedge fund, Situational Awareness, went from $45 billion at the start of July… to just $10 billion this past Thursday.
How? Here’s Yahoo Finance with the scoop:
Leopold Aschenbrenner's hedge fund, Situational Awareness, lost roughly $35 billion in assets after margin calls from its prime brokers forced a distressed sale of its publicly traded holdings to Ken Griffin's Citadel, according to CNBC.
That’s a lot of Wall Street jargon to say the fund’s lenders came knocking for more money. When Aschenbrenner couldn’t pay up, he had to unload his stocks at fire-sale prices.
Among them? SanDisk, CoreWeave, and Nebius Group. Each of these positions fell over 50% over the past month.
That’s a tough loss, but it doesn’t explain a $35 billion collapse. What happened is the fund used as much as 400% leverage. That means the fund made bets several times larger than the cash it actually had.
We wrote about Aschenbrenner in our flagship advisory, The Asymmetric Edge, back in early June. He had built one of the hottest funds in Silicon Valley around a simple idea – not too different from the one we’ve been pounding the table on in these pages since late last year.
He believed the biggest AI winners would be the companies controlling the bottlenecks underneath the industry. Memory, chips, data centers, electricity… the physical infrastructure every AI company needs.
I still think he got that part right. The problem is that he wasn’t just long these companies. He was long with leverage. And when you use leverage, it doesn’t matter how smart you are. If you don’t time the trade perfectly, you can lose everything.
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