Via foxbusiness.com
Griffin's firm scooped up a distressed AI portfolio at a steep discount, then unwound most of the risk in three weeks flat
When a hedge fund built on AI hype implodes, someone has to catch the falling knives. Ken Griffin, as usual, brought a very large basket.
Citadel acquired a massive chunk of the distressed public equity portfolio belonging to Situational Awareness, the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, in late July 2026. The portfolio, purchased at an estimated $10B to $16B, came from a fund that had watched its assets collapse from roughly $45B to around $10B after a brutal stretch for AI and semiconductor stocks triggered margin calls that gutted the operation.
From wreckage to winnings in three weeks #
By August 21, the firm had executed nearly 100 block trades worth more than $4B, unwinding over 80% of the portfolio’s inherent risk.
The payoff showed up immediately in Citadel’s flagship Wellington fund, which posted a 5.9% gain in July 2026. That marked the fund’s strongest monthly performance since 2022.
Griffin framed the episode as a testament to Citadel’s ability to rapidly assess and manage complex investment risks.
The Situational Awareness implosion #
Aschenbrenner launched Situational Awareness with heavy exposure to semiconductor and AI-adjacent equities. At its peak, the fund managed close to $45B. July 2026 was catastrophic for global semiconductor and AI stocks, which shed trillions in market value during the month. Assets cratered from $45B to roughly $10B after margin calls forced liquidation of positions.
Market stabilizer or opportunist? Both. #
By absorbing the forced selling from Situational Awareness rather than letting it hit the open market in an uncontrolled fire sale, Citadel prevented what could have been a much uglier cascade through AI and chip stocks. The block trades distributed risk across dozens of counterparties in an orderly fashion, rather than letting it crash into limit order books and blow out prices for every other holder of those names.
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