JPMorgan Cuts Lending to AI-Focused Hedge Fund After Losses

JPMorgan Chase has cut off lending to Situational Awareness, the hedge fund founded by AI investor Leopold Aschenbrenner, following heavy losses during a sharp sell-off in technology stocks, according to the UK’s Financial Times.

The bank had provided financing to the fund through its prime brokerage business, allowing Situational Awareness to use leverage for its investments. JPMorgan ended the lending relationship after the fund suffered an approximate 67% decline in its assets during July, sources told Reuters.

The move comes as a blow to Aschenbrenner, who had gained attention for making large bets on companies expected to benefit from the growth of artificial intelligence.

Situational Awareness had previously built substantial positions in major semiconductor and AI-related companies. However, following a sharp global decline in chip stocks that severely hit its leveraged positions, the AI‑focused hedge fund transferred the bulk of its public equity holdings to Citadel.

After the July selloffs, the assets owned by the fund founded by the 24-year-old former OpenAI researcher dropped to around $10bn, from a peak close to $45bn.

The episode highlights the risks facing prime brokers as hedge funds take larger positions in a concentrated group of technology stocks.

Situational Awareness ended July around 80% up for the year despite this setback, although the scale of the loss sharply reduced its assets.

According to CNBC, the firm is preparing to return to the markets by purchasing options in stocks including Advanced Micro Devices, Bloom Energy and Coreweave.