JPMorgan cuts off lending to Aschenbrenner's AI fund after a 67% July loss

JPMorgan Chase has ended its prime-brokerage lending to Leopold Aschenbrenner's hedge fund, Situational Awareness, the Financial Times reported Friday. Reuters, citing a person familiar with the matter, said JPMorgan notified the fund it would cut off the relationship after large losses on AI bets. Neither report gave a dollar amount, an effective date, or the collateral terms.

Prime brokers are the banks that lend cash and securities so a fund can hold more than its own capital. Pulling that line is a credit decision, not a new sale of shares. Friday's Reuters account said a chip-stock decline had triggered a margin call that forced Situational Awareness, in late July, to sell most of its public equities to Ken Griffin's Citadel. The July unwind already did that selling. What Friday tests is whether the banks still financing the fund will keep doing so on the old terms. Friday's session has no established link to that question. The answer will show up, if it shows up, as another broker leaving rather than as a print in the semiconductor funds.

Goldman Sachs, Citigroup, and Bank of America remain active brokers, Reuters reported, and the fund has recently started working with Clear Street, a New York brokerage. Those remaining terms are private; none of the banks offered an on-record explanation on Friday. Bank of America declined to comment; JPMorgan, Situational Awareness, Goldman Sachs, and Citigroup did not immediately respond to Reuters.

The July letter and the Citadel sale

In a letter to investors that Reuters saw on Thursday, July 30, Aschenbrenner, a former OpenAI researcher who launched the fund in 2024, said the portfolio fell 67% in July and was still up 80% for 2026 at the end of the month. "We came closer to permanent capital impairment than is acceptable to us," he wrote. "We let you down this month." He said positions moved against the fund, liquidity dried up, and the firm removed all leverage from the portfolio.

CNBC, citing people familiar with the matter, reported on July 30 that Situational Awareness had reached as much as $45 billion in assets at the start of July and was forced to sell all of its public-stock holdings, with Citadel agreeing to buy them. A day later it put assets around $10 billion after the sale and said leverage had been as high as 400%, without saying whether that figure was gross or net or which derivative contracts produced it. About two-thirds of the book before the sale was long and short public equities, CNBC reported; the rest was private-company stakes, dominated by a large Anthropic holding. CNBC could not determine whether the sales satisfied the margin calls, and it did not identify which lender issued them.

The public names that built the loss were concentrated. Business Insider, working from the fund's June 30 13F, put SanDisk at $5.7 billion and Micron Technology at $5.6 billion, together 56% of a U.S. stock portfolio it described as just over $20 billion, excluding puts and calls. Quartz, describing the same filing, said the fund had been accumulating memory chipmakers, data-center operators, and power providers that stood to benefit from the physical AI buildout, while shorting software companies it said Aschenbrenner believed the technology would undermine. A 13F is a long-only U.S. snapshot: it does not capture shorts, foreign-listed shares, or private stakes, so that $20 billion book and CNBC's $45 billion peak are different scopes. From the June 30 close through July 31, SanDisk fell 46.6% and Micron 28.7%, on our prices. CNBC separately listed Nebius Group, SanDisk, Micron, and CoreWeave among the largest holdings at the end of the first quarter and said all four were down more than 35% in July.

The Financial Times, in Friday's account, said Aschenbrenner planned to rebuild a hybrid public-private book with tighter leverage limits and had been using fully paid "flex options" on Advanced Micro Devices, Intel, SK Hynix, SanDisk, and CoreWeave, with downside capped at the prepaid premium. That is the newspaper's reporting, not a current position list.

Semiconductor funds still sit below June

The names in that 13F overlap the chip funds a holder can actually buy. VanEck's semiconductor fund ASMH (A under etf.net's published method), a $69.3 billion tracker of U.S.-listed chip makers, held Nvidia at 22.4% and Micron at 5.6% as of Friday. iShares' semiconductor fund ASOXX (B), $44.2 billion, held Nvidia at 9.2% and Micron at 9.2%. SanDisk does not sit in those top lines.

What the board shows is co-movement through a violent July, then a partial bounce that has not filled the hole.

Friday, ASMH rose 1.5% and ASOXX 1.9%. ASOXX is still 17.7% below its June 30 close; ASMH is 13.3% below. Both remain up sharply on the year: ASOXX 75.2% year to date, ASMH 57.9%.

The leverage regulators had already flagged

The Federal Reserve, in its May 28 Financial Stability Report, said hedge-fund gross notional leverage, defined as gross notional exposure divided by net asset value, was about unchanged at near all-time highs in the third quarter of 2025, the latest comprehensive Form PF reading. Dealers, in the March 2026 Senior Credit Officer Opinion Survey, told the Fed that hedge funds' use of financial leverage had been unchanged since the end of 2025. "High leverage can lead to spillovers if the fund suddenly loses access to funding," the Fed wrote. It did not name Situational Awareness.

The Bank of England was more specific. In its July 7 Financial Stability Report, published three weeks before the fire sale, it said hedge funds' equity prime-brokerage balances were at record levels, with supervisory intelligence indicating those balances had risen around 40% globally over the prior year. Market intelligence, it added, suggested hedge-fund equity positions had become more concentrated in particular sectors, such as semiconductors. That, too, was an industry reading, not a finding about this fund.

In late August, Reuters and The New York Times reported that the Securities and Exchange Commission had sent subpoenas to Wall Street banks working with Situational Awareness, seeking information about the fund's trades and use of leverage. That inquiry remains unresolved.