How to lose $35 Billion Dollars Betting on AI

Summary
Dagogo Altraide of ColdFusion examines the rapid rise and sudden multi-billion-dollar unwind of Leopold Aschenbrenner’s hedge fund, Situational Awareness LP. The video chronicles how the 24-year-old former OpenAI researcher scaled his fund from $225 million to $45 billion on high-conviction AI bets, before losing approximately $35 billion within weeks in July 2026 due to extreme leverage and an unexpected market swing.

What is shown

• [00:04] – [02:13] Introduction: Dagogo details Leopold Aschenbrenner’s background, his wedding weekend in Carmel, California, and the sudden margin calls forcing the liquidation of his fund.
• [02:14] – [05:30] Vows and Margin Calls: Background on Aschenbrenner’s June 2024 paper Situational Awareness: The Decade Ahead, his previous roles at FTX’s philanthropic arm and OpenAI’s Superalignment team, his controversial firing in April 2024 over security memos, and subsequent public attention following his Tim Ferriss podcast appearance.
• [05:31] – [06:40] Fund Launch & Backers: The launch of Situational Awareness LP with early backing from tech figures including Patrick and John Collison, Nat Friedman, and Daniel Gross.
• [06:41] – [09:31] Rise of the Wonderkid: Review of Fortune profiles, Tyler Cowen calling him an “economics prodigy”, early academic milestones, and archival footage of philosopher David Chalmers discussing recursive AI self-improvement in 1996.
• [09:32] – [11:17] Sponsor Segment: Demonstration of the Wispr Flow voice-to-text dictation application across mobile and desktop workflows.
• [11:18] – [14:06] The Plan: The mechanics of the fund’s trade—going long on physical AI infrastructure (such as SK Hynix, CoreWeave, and Nebius) and shorting enterprise SaaS (such as Adobe and Salesforce) using 400% leverage (4:1), followed by the July 2026 market reversal when Chinese open-weight models triggered an AI hardware selloff and a software squeeze.
• [14:07] – [16:08] Cleaning the Wreckage: Margin calls from prime brokers (Goldman Sachs, JPMorgan Chase, Bank of America), the emergency block sale of approximately $16 billion in stock to Citadel at a 10%+ discount on July 30, 2026, and the survival of an illiquid $5 billion private stake in Anthropic.
• [16:09] – [19:49] The Leverage Trap: Analysis of leverage risks, volatility decay, and portfolio sizing referencing hedge fund manager Cliff Asness and the Kelly criterion.
• [19:50] – [22:21] Conclusion: Reflection on current AI developments (including references to GPT-6 Astra and model architectures), the boundary between conviction and risk management, and recent reporting that JPMorgan cut off lending to the fund.

Claims & numbers

• The presenter says Leopold Aschenbrenner launched Situational Awareness LP with $225 million and grew it to manage roughly $45 billion within two years.
• The presenter states that the fund lost roughly $35 billion over a two-week period in July 2026, shrinking from $45 billion to approximately $10 billion.
• The presenter claims the fund operated with roughly 400% leverage (4 to 1 gross exposure).
• The presenter reports that between peak and trough in July 2026, the fund’s top long positions dropped between 50% and 77.5% (including Nebius down 50.6%, Bloom Energy down 53.4%, SanDisk down 56.9%, CoreWeave down 60.3%, SharonAI down 77.5%, and IREN down 61.8%), while shorted software rallied (e.g., Adobe squeezed up 28%).
• The presenter claims Citadel acquired approximately $16 billion of Situational Awareness’s public stock portfolio in an overnight block sale on July 30, 2026, at a discount exceeding 10%.
• The presenter states that the fund’s surviving value rested on an estimated $5 billion illiquid, private stake in Anthropic.
• The presenter notes that days after the Citadel deal, Aschenbrenner wired $400 million into an unnamed private company after previously investing $100 million into it.
• The presenter mentions testing GPT-6 Astra and observes that incorporating a loop token process has improved model architecture.

Notable quotes

• [02:20]: “You can see the future first in San Francisco.”
• [09:14]: “What happens if you’re wrong?”
• [19:29]: “You never go full Kelly.”

Assessment
This is a documentary-style retrospective and financial analysis video combining news clips, podcast interviews, public filings, and on-screen graphics. The commentary is grounded in published reporting and financial analysis, though the narrative heavily synthesizes third-party journalistic accounts (such as reports from the Wall Street Journal, Bloomberg, CNBC, and Fortune) rather than original investigative records.

Described by gemini-3.8-flash on 2026-10-17 from the video’s audio and frames.