Citadel Buys AI Fund Situational Awareness' Portfolio After Forced Unwind: Ross Gerber Says 'Leverage Will Kill and Bury You'

Ken Griffin‘s Citadel LLC. reportedly purchased most of Leopold Aschenbrenner‘s AI-focused hedge fund Situational Awareness‘ public equities portfolio, sparking discussion on social media, with investors questioning the timing of the transaction after Citadel Securities LLC. recently called for a surprise Federal Reserve rate hike.

Forced AI Fund Sale Ends With Citadel

According to Reuters News report, Citadel hedge fund acquired a bulk of Situational Awareness’ public stock holdings after the AI-focused hedge fund was forced to unwind positions following the recent AI stock selloff.

The report said the fund had come under pressure to either raise fresh capital or offload its portfolio, the report added, citing two sources familiar with the matter.

The deal was first reported by The Wall Street Journal on Thursday.

Citadel LLC, Citadel Securities, Situational Awareness and Aschenbrenner did not immediately respond to Benzinga’s request for comment.

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Leverage Was the Real Lesson

Investor Ross Gerber said the forced unwind showed the dangers of excessive leverage while creating a buying opportunity for long-term investors.

“Leverage will kill and bury you,” Gerber added.

He said that investors willing to hold for the long term had been able to buy quality AI stocks at bargain prices during the selloff.

Boloor Questions the Sequence Of Events

Futurum Equities analyst Shay Boloor pointed to Citadel Securities’ recent call for a surprise July Fed rate hike and questioned the sequence of events.

“So it was warning that the Fed could hike in July while preparing to buy the AI stocks that narrative was helping crush,” Boloor said in a post on X.

The analyst described the episode as “the story of 2026.”

The Fed ultimately left interest rates unchanged on Wednesday.

The Fund’s Rapid Rise and Sudden Reversal

Situational Awareness, founded by former OpenAI researcher Aschenbrenner in 2024, had grown to roughly $20 billion after returning 439% net through June on AI-focused bets.

However, the had fund sought fresh capital and offered some investors the chance to buy assets directly from its portfolio after the AI selloff.

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