Jane Street, the secretive Wall Street trading powerhouse, suffered a $15 billion loss in July from its exposure to Situational Awareness, an AI-focused hedge fund that collapsed under the weight of leveraged bets on semiconductor stocks. The loss marked the firm’s worst month in approximately a decade, according to Reuters and Bloomberg.
Situational Awareness, run by 24-year-old Leopold Aschenbrenner, a former OpenAI researcher, imploded rapidly in late July after reaching a peak of $45 billion in assets earlier that month. The hedge fund had racked up gains of more than 1,000% since its inception in July 2024, but faced catastrophic losses as AI-related stocks plunged, triggering massive margin calls. Using leverage of up to 400%, Aschenbrenner was forced to sell the bulk of his public stock portfolio to Ken Griffin’s Citadel at a discount, with assets plummeting to around $10 billion by late July, according to CNBC.
In an internal note to employees, Jane Street acknowledged that July was a “bad month” and that its Situational Awareness investment, which had “become large by performing well in the first half of the year,” suffered a significant drawdown. The firm said its stake in Aschenbrenner’s fund was “about flat on the year, but still up over the entire period we have been invested,” according to Reuters.
Beyond Situational Awareness, Jane Street took hits from its long positions in non-AI stocks in Asia and from AI-exposed equities that collapsed in July. Memory and semiconductor stocks, including names like SK Hynix and CoreWeave, fell around 50% during the month, according to the firm’s internal communications reviewed by Reuters. Jane Street said it would be “more selective” about risk going forward and had “closed a significant portion of our risk in the specific areas we lost on in July.”
Despite the setback, Jane Street remains a dominant force in global markets. The firm has generated more than $40 billion in trading revenue year-to-date, easily outpacing the largest U.S. banks and other market-making rivals, according to sources cited by Reuters. The loss underscores the broader turbulence in AI-focused trading strategies and the risks posed by excessive leverage in crowded trades. When Situational Awareness was forced to unwind its positions rapidly, it amplified losses across the market, a pattern that Moynihan has called a warning shot for leveraged markets.
Aschenbrenner had launched Situational Awareness after leaving OpenAI in 2024 and publishing a widely-read 165-page essay titled “Situational Awareness: The Decade Ahead,” in which he argued that artificial general intelligence could arrive within years. He raised initial seed capital of $225 million from Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman, and investor Daniel Gross. That rapid rise and sudden collapse has made him the most high-profile casualty of volatility in the AI boom, according to CNBC reporting.
Sources
- Reuters — Jane Street’s $15 billion loss in July, exposure to Situational Awareness, year-to-date trading revenue exceeding $40 billion, internal employee note details
- CNBC — Situational Awareness fund collapse from $45 billion to $10 billion, leverage of up to 400%, forced sale to Citadel, Aschenbrenner background and fund history
- Bloomberg — Jane Street’s first monthly loss in about a decade, AI stock selloff details
- Wall Street Journal — Aschenbrenner’s age (24), prior gains exceeding 1,000%, Situational Awareness hedge fund performance
