JPMorgan Halts Lending to Situational Awareness Following AI-Related Losses, Sources Say

The JPMorgan Chase logo is depicted in an illustration from December 1, 2025. According to a source speaking to Reuters on Friday, JPMorgan Chase (JPM.N) has ceased lending activities for Leopold Aschenbrenner's hedge fund, Situational Awareness, after significant losses from AI investments nearly led to its collapse. The hedge fund liquidated the majority of its equity holdings to Citadel following a widespread downturn in chip stocks that impacted its leveraged positions. Aschenbrenner, a former researcher at OpenAI who established Situational Awareness in 2024, initially gained attention for his bold investments in the AI sector, achieving remarkable returns. However, after the recent losses, JPMorgan, a primary lender for the fund, informed Situational Awareness of its decision to discontinue their lending relationship. Other Wall Street banks such as Goldman Sachs (GS.N), Citigroup (C.N), and Bank of America (BAC.N) continue to engage with the firm, which has also begun collaborating with New York-based brokerage Clear Street. While BofA, JPMorgan, Goldman Sachs, and Citi declined to comment, Situational Awareness did not respond immediately to requests for comments from Reuters. This development was first reported by the Financial Times. Hedge funds often leverage borrowed capital for greater returns, but concentrated investments can lead to significant losses in volatile markets. In July, a extensive selloff in global chip stocks necessitated a margin call for the fund, increasing the urgency to secure new capital or liquidate its positions. The fund's portfolio experienced a 67% decline in value that month, prompting Aschenbrenner to inform investors that the fund was nearing 'permanent capital impairment,' although he expressed optimism regarding the portfolio's fundamentals. Additionally, the steep losses attracted scrutiny from securities regulators, with reports indicating that the U.S. Securities and Exchange Commission has issued subpoenas to Wall Street banks associated with Situational Awareness to gather information about the fund's trading practices and leverage utilization. Reporting by Anirban Sen in New York and Utkarsh Shetti in Bengaluru; Edited by Shailesh Kuber and Alan Barona.