The spectacular saga around Situational Awareness isn’t over yet.
The once mega-hyped AI hedge fund, founded by 24-year-old Leopold Ashenbrenner, nearly imploded last month after it lost over two-thirds of its value during a mass tech sell-off, wiping out billions of dollars of investor money.
Now, the Securities and Exchange Commission is investigating its catastrophic reversal of fortunes, sending subpoenas to the banks that handled and fronted the money for its disastrous bets, the New York Times reports, citing anonymous sources.
The subpoenas demanded details on the timing of the fund’s trades and for its communications with the bank about the money it was borrowing. Situational Awareness used the borrowed money, called leverage, to buy shares in the AI stocks it was investing in, which boosted its returns but exposed it to even greater losses when those assets hit a downturn.
