Prophets Die First, A Genius Stock God's Bull Market Sacrifice

Written by: Xiao Bing

Those who foresee first die first.

July 30, 2026, is estimated to be the most unforgettable day of Leopold Aschenbrenner's life.

A month ago, his fund Situational Awareness LP was still the brightest new star on Wall Street. According to investor letters seen by FT, as of the end of June, the fund's net return for the first half of this year was 439%, making it one of the best-performing hedge funds of 2026, with total assets under management peaking at $45 billion in early July.

On July 24, Leopold Aschenbrenner wrote a letter to his investors. In the letter, he admitted that his fund did not escape unscathed from this round of AI stock sell-offs. After writing this, he turned the topic elsewhere: This is one of the most attractive buying windows since early 2025. At the end of the letter, there was a postscript welcoming existing investors to add capital before August 1.

That money never arrived.

Before the market opened on July 30, three prime brokers—Bank of America, Goldman Sachs, and JPMorgan Chase—simultaneously issued margin calls to Situational Awareness. The fund's public equity portfolio was leveraged approximately four times. That morning, the entire public equity book, both long and short positions, was transferred in a block trade to Ken Griffin's Citadel.

From being fired from OpenAI's Superalignment Team, to writing a 165-page paper that shook Silicon Valley and Washington, to founding a fund, swelling to $45 billion, and finally being forced to liquidate.

The whole process took him less than two years.

He is 25 years old this year. Five years ago, he was still an undergraduate at Columbia University.

From OpenAI to Wall Street

Leopold Aschenbrenner was born in Germany, both his parents are doctors, and he attended the John F. Kennedy School in Berlin for high school. He graduated from Columbia University at 19, with a double degree in Economics and Mathematical Statistics, and was the valedictorian.

His legendary life story begins in April 2024.

At that time, he was working in OpenAI's Superalignment Team, working under Jan Leike and Ilya Sutskever. His job was to research how to prevent future super AI from posing a threat to humanity. But he increasingly felt that OpenAI's safety measures were problematic. He wrote a memo to the board of directors, pointing out serious information security risks within the company, particularly the risk of potential foreign industrial espionage.

Then he was fired; OpenAI's stated reason was "information leakage," which he denied.

Two months after leaving OpenAI, he wrote the long article "Situational Awareness" that made the entire AI circle remember his name.

Two months later, in June 2024, he published a 165-page paper titled "Situational Awareness: The Decade Ahead".

This paper went viral simultaneously in Silicon Valley, Washington, and Wall Street. The core argument was simple: AGI (Artificial General Intelligence) will arrive around 2027, and may recursively self-improve into superintelligence between 2028 and 2030. The bottleneck is not algorithms, but physical infrastructure: electricity, transformers, transmission lines, cooling systems, and data center land.

Ivanka Trump, daughter of the US President, publicly praised this paper. Stripe founders Patrick and John Collison, former GitHub CEO Nat Friedman, and former Y Combinator partner Daniel Gross pooled $225 million for him to start a hedge fund. The fund was named Situational Awareness LP, sharing the same name as his paper.

He also invested almost all of his personal net worth into it.

The Path to Legend

From late 2025 to the first half of 2026, Leopold's fund was like it was on a rocket.

Starting with $225 million, assets under management reached $45 billion at the peak in early July 2026, expanding 200 times.

His holding logic was written in the paper: since the bottleneck is electricity, whoever holds electricity, land, and cooling facilities is mispriced AI infrastructure.

This inference led him to a place most AI investors would not go: Bitcoin miners.

After the halving in April 2024, profit margins for traditional mining were continuously compressed, and many mining companies began converting server rooms into hosting sites for AI and high-performance computing. Their balance sheets held ready-made power contracts, land, and plants, while the market was still valuing them using a mining framework.

As of March 31, 2026, the fund's US stock holdings were valued at $5.52 billion, with 29 targets. Miners and their data center businesses totaled $1.38 billion, accounting for about a quarter of the entire book; Core Scientific was the largest at $418.7 million, followed by IREN at $328.6 million, and Applied Digital at $278 million. The top five holdings included CoreWeave, Bloom Energy, Intel, Lumentum, and Core Scientific, accounting for approximately 68% of the stock book.

These companies' stock prices soared in the AI infrastructure frenzy.

The other half of the book was shorts.

The same 13F disclosed put options with a notional size of approximately $8.46 billion, targeting names like VanEck Semiconductor ETF, Nvidia, Oracle, Broadcom, AMD, Micron, and TSMC, accounting for 62% of the total 13F filing amount of $13.68 billion.

The vast majority read this as one sentence: He is shorting chips.

The option values in the 13F refer to the value of the underlying securities, not the money he actually spent; behind the $8.46 billion notional size, the actual cash might be only a few percentage points of that. The 13F also does not disclose strike prices, expiration dates, and hedging relationships; looking at this document alone, no one can distinguish whether a put option is a directional short or insurance bought for long positions.

Actions before the crash explain more.

According to unusual_whales, the latest 13F update shows he was adding to chips, building new positions in TSMC, Intel, ASML, Nvidia, and Corning, adding call options on Micron, TSMC, and SanDisk, while reducing Core Scientific and Bloom Energy; the real short positions were in software stocks.

By the end of June 2026, this "long AI infrastructure, short software stocks" fund had a net return of 439%; his holdings became Wall Street's "AI Infrastructure Textbook," retail investors chased the 13F to buy, and analysts treated his positions as a barometer. An analyst from a large tech fund said in a Fortune interview: "When the market is nervous, colleagues will say 'Leopold says it's fine,' and then everyone stops selling."

He became the prophet of the AI era, a 25-year-old prophet.

Cracks and Collapse

In one month, a double squeeze came.

In July, his long side was falling. SK Hynix fell nearly 40% from its June high, Nvidia dropped below $200, and Micron and CoreWeave were all heavily hit. His short side was rising; software stocks like Adobe surged inversely due to expectations of AI application implementation.

Long-short squeeze combined with leverage liquidation, Leopold's fund suffered huge losses; the three prime brokers intervened to help meet margin requirements, but margin calls kept coming like an avalanche.

He tried all other methods.

The letter on July 24 invited old investors to add capital. He talked with lenders. He also explored selling part of the holdings individually to individual investors. Millennium and Jane Street both evaluated this book and chose not to take it; Jane Street was itself an investor in this fund.

Finally, all public stocks were liquidated; there was only one buyer: Citadel, Ken Griffin's hedge fund. The price was not disclosed, but the market generally guessed it was a "fire sale price"; positions forced to be sold cannot fetch a good price.

From a return rate of 439% to stock liquidation, it took only one month.

Hunt?

Up to this point, this was originally just a story of a genius fund manager crushed by leverage and market volatility. But a timeline began circulating on X, making the whole event not so simple.

The timeline is as follows:

On July 27, Bloomberg reported that Frank Flight, Head of Macro Strategy at Citadel Securities, predicted in a client report that the Federal Reserve would unexpectedly raise interest rates by 25 basis points at the meeting on July 29. He was one of the few major institutional strategists to make such a prediction; the probability of a rate hike on Polymarket was only 24.3%.

Frank Flight's argument was not some inflation data, but credibility. Kevin Warsh (the new Federal Reserve Chairman nominated by Trump) needed to consolidate policy credibility through an unexpected rate hike and decisively end the era of forward guidance.

From July 28 to July 29, this prediction fermented rapidly within the trading circle. Rumors of a rate hike acted like a fuse, igniting already tense market sentiment. Tech stocks plummeted first; Nvidia, AMD, TSMC, and SK Hynix all suffered heavy losses. Leopold's fund was already teetering under the double squeeze; the panic selling triggered by rate hike rumors became the last straw that broke the camel's back, and margins were completely breached.

On July 30, Citadel took over Leopold's entire liquidated listed stock portfolio.

The Federal Reserve ultimately did not raise interest rates on July 29. But the market no longer cared; the damage caused by the rumors was done, and Leopold's positions had already been forcibly liquidated.

This timeline was reposted by countless people on X. The core question is: The Head of Macro Strategy at Citadel Securities (the market-making department) released a minority rate hike prediction two days before the Federal Reserve decision; a rumor directly triggered a tech stock sell-off, leading to Leopold's blowout, and finally Citadel (the hedge fund department) took over Leopold's positions at a low price.

Citadel Securities and Citadel Hedge Fund are two independent legal entities, sharing founder Ken Griffin, but operating independently. Citadel Securities is a market maker, handling about a quarter of US stock trading volume and 35% of retail orders; it can see real-time order flow. As Head of Macro Strategy at Citadel Securities, who is Frank Flight's client report directed at? Can he see who is being forced to sell in the market? If a rumor can trigger billions worth of sell-offs, is the precision of this rumor too coincidental?

These questions have no answers. But the discussion on X is becoming more intense. Some say this is a perfect hunt: first release a rate hike signal, trigger market panic, force out leveraged positions, then take over at a low price. Others say this is just a coincidence; Frank Flight's rate hike prediction was based on his independent judgment of Warsh's policy, Leopold's blowout was due to his own long-short squeeze and excessive leverage, and the rumor just accelerated what would have happened anyway.

What is the truth exactly? Is it coincidence, is it a hunt, or is it the cruel logic of the market itself?

It remains a mystery.

The Spark Remains

After the news of Leopold's liquidation broke, the market reaction was interesting.

Those stocks believed to be most likely to crash surged across the board; Nebius rose 26.3%, IREN rose about 26%, CoreWeave rose 21.8%, Core Scientific rose 21%... the entire AI sector, including storage, fought back strongly.

CNBC host Jim Cramer gave his explanation before the market opened: Once those who have to sell are cleared out, the bottom emerges. He added that there is more than one such person; many similarly leveraged positions were pressing on the same batch of stocks.

Market strategist Dan Niles' statement was similar; he called this round of forced liquidation a cleanup, and mentioned that prime brokers handled this quite carefully this time to avoid a repeat of Archegos. In 2021, Bill Hwang's family office blew up; Credit Suisse alone lost about $5.5 billion, and this bank was acquired by UBS in 2023. ZeroHedge simply gave this event a name: Archegos 2.0.

Retail investors celebrated on X: "The prophet has fallen, the bull market begins."

His blowout became the signal for Wall Street to bet on AI bottoming out.

This is very ironic.

He was once the most staunch evangelist of the AI narrative, and finally became the most tragic sacrifice of the AI narrative.

However, Leopold has not yet fallen; the fund has not closed.

Only the public equity portfolio was liquidated. Situational Awareness retained all private holdings, the largest of which is equity in Anthropic, valued by FT at approximately $5 billion. The company will continue to operate in the form of a private investment entity. There were reports that it was peddling Anthropic equity; the fund spokesperson denied this to CNBC.

A detail is that Leopold's fiancée, Avital Balwit, is exactly the Chief of Staff to Anthropic CEO Dario Amodei.

Relying on Anthropic, the genius youth Leopold still has the possibility of returning to the peak.

Looking back, his fund's name "Situational Awareness" has now become the biggest irony.

He had situational awareness, but he did not have market awareness.

Or rather, he had situational awareness, but no Margin Call awareness.

Long-term correct, short-term zeroed out; on Wall Street, this is called dying being right.