JPMorgan Chase has terminated its lending relationship with Situational Awareness, a hedge fund managed by Leopold Aschenbrenner, following significant losses in the artificial intelligence sector. A source familiar with the matter reported the decision on Friday, September 11, 2026, noting that the fund experienced a near-collapse after leveraged bets on AI infrastructure were exposed by a global decline in semiconductor stocks.
The fund, which was established in 2024 by Aschenbrenner, a former OpenAI researcher, grew to approximately $45 billion by early July 2026. However, its portfolio value fell by 67% during July alone. The fund informed investors that it had approached a level of capital impairment that was "closer to permanent" than acceptable, though it maintained optimism regarding its underlying investments.
To meet margin requirements, Situational Awareness liquidated the majority of its public equity holdings to Citadel. The fund’s primary investments at the end of the first quarter included Nebius Group, Sandisk, Micron, and CoreWeave, all of which experienced price declines exceeding 35% in July. While JPMorgan has cut off lending, other institutions including Goldman Sachs, Citigroup, and Bank of America remain active as brokers for the fund.
The losses and the fund’s use of leverage drew scrutiny from federal authorities. In August 2026, the U.S. Securities and Exchange Commission (SEC) issued subpoenas to several Wall Street banks that worked with Situational Awareness, seeking information regarding the fund’s trading activities. Aschenbrenner, who is in his mid-twenties, previously worked on OpenAI’s Superalignment team before being dismissed in 2024 following a dispute over the disclosure of internal documents.
The scale of the fund's liquidation—transferring the majority of its public holdings to Ken Griffin's Citadel—illustrates the rapid impact of a margin call on large-scale institutional portfolios. A margin call occurs when a broker demands that an investor deposit additional money or securities so that the account is brought up to the minimum value required to maintain a leveraged position. When Situational Awareness could not meet these requirements through other means, it was forced to offload billions of dollars in assets during a semiconductor market rout.
This event sets a precedent for how major Wall Street lenders may react to concentrated, leveraged bets in emerging technology sectors like AI. The SEC's involvement through subpoenas signals increased regulatory interest in how banks manage risks associated with high-leverage clients. What happens next depends on whether Situational Awareness can stabilize its remaining private holdings, such as its stake in Anthropic, and how the SEC proceeds with its inquiry into the fund’s trades and the leverage provided by its prime brokers. JPMorgan, Situational Awareness, Goldman, and Citi did not immediately respond to requests for comment.