The Securities and Exchange Commission (SEC) has sent subpoenas to major Wall Street banks over their dealings with Situational Awareness, the artificial intelligence (AI) hedge fund that nearly collapsed last month.

Three people briefed on the outreach described the requests to the New York Times. Regulators want trade timing data and lender communications. The fund has not been accused of wrongdoing.

SEC Investigation Targets the Leverage Paper Trail

The subpoenas went to banks that cleared the fund’s trades and financed its positions. Bank of America, Citi, Goldman Sachs, and JPMorgan Chase ranked among its largest counterparties, according to a regulatory filing.

Investigators asked for the timing of specific trades. They also requested messages the banks exchanged with the fund about borrowed money, and told them to preserve every record tied to the San Francisco firm.

All four banks declined to comment. So did the SEC. A Situational Awareness spokesman said scrutiny of this kind was predictable.

“It is to be expected that regulators would closely examine any funds that are high profile, produce significant returns or have particularly dramatic drawdowns,” Situational Awareness said in a statement.

The timing lands as bank executives flag hidden borrowing across markets. JPMorgan chief Jamie Dimon warned this month that margin debt hit records.

A $30 Billion Book That Unwound in Days

At its peak the fund ran more than $30 billion and borrowed tens of billions more. Leopold Aschenbrenner, a 24-year-old former OpenAI researcher, founded it roughly two years ago.

Filings show the strategy turned far more aggressive before it broke. Protective put options worth $8.5 billion in March had largely disappeared by June 30, replaced by $12.5 billion in outright long positions.

AI names then dipped in late July while the traditional tech stocks the fund had shorted climbed. Margin calls followed, the portfolio fell about 67%, and Citadel bought the public book at a roughly 10% discount.

Bitcoin Miners Were Caught in the Middle

Crypto investors absorbed part of that unwind without knowing it. Mining stocks had grown to a quarter of the book, reaching $1.99 billion in the final 13F filing.

Core Scientific, Riot Platforms, and IREN led those positions. Ken Griffin’s firm has since cleared the miner overhang through nearly 100 block trades.

Any SEC investigation at this stage may never produce a case. The documents it gathers, however, could show how long the banks funded one concentrated AI bet before withdrawing credit.

Situational Awareness still holds a stake in Anthropic, which is weighing a public listing. That position now stands as the clearest measure of what survived July.

Source: BeInCrypto