Citadel Snaps Up Distressed Assets from Collapsed Situational Awareness Fund
Citadel, the flagship hedge fund of billionaire Ken Griffin, has acquired approximately $16 billion worth of public equities from Situational Awareness, a fund managed by Leopold Aschenbrenner. The deal, which closed on July 30 and into July 31, represents one of the largest forced portfolio liquidations in recent memory.
The assets were sold to Citadel at a discount exceeding 10% to market value, with some sources suggesting that the fund's leveraged portion was acquired for as low as 85-90% of its original price. This marks a significant reversal from Situational Awareness' peak asset value of $45 billion in early July.
The fund's downfall can be attributed to its aggressive bets on AI technologies and infrastructure, which went sideways with sharp declines in holdings like SK Hynix. Additionally, the fund had placed short bets on software stocks that moved against it, leading to margin calls that forced a liquidation of the leveraged portion of the portfolio.
The acquisition marks a significant expansion for Citadel into the AI and crypto sectors, with the firm now holding multi-billion-dollar stakes in Bitcoin mining companies like Core Scientific, IREN, and Riot Platforms. The connection between AI infrastructure and Bitcoin mining is seen as a key convergence point, with data centers that mine Bitcoin also being used to train AI models.