Situational Awareness, star AI hedge fund that nearly imploded, now being probed by the SEC

Situational Awareness went from Wall Street curiosity to cautionary tale in a hurry. The AI-focused hedge fund, run by twentysomething OpenAI alum Leopold Aschenbrenner, piled into AI bets and briefly rode a wave of feverish attention.

Then the market turned. At the end of July, a slump in AI stocks erased billions of dollars in value at the firm. That kind of hit is brutal anywhere; in a fund built on the idea that AI keeps winning, it looks even worse.

Now the trouble is moving from the market to Washington. The New York Times says the SEC has been subpoenaing banks that did business with the fund, focusing on the lenders that oversaw its trading and helped channel funding to support it. The government also reportedly told those banks to preserve information tied to the hedge fund.

Situational Awareness has not been accused of wrongdoing, according to the report. The firm told the Times that scrutiny of high-profile funds is normal and said it would cooperate fully with any regulatory request. But after the rapid rise, the sharp drop, and now the subpoenas, the story has turned from AI triumph to basic survival.