Jane Street Lost $15B in July on AI Hedge Fund Stake

Trading Giant's Rare Monthly Loss

Jane Street, one of the world's largest proprietary trading firms, recorded a $15 billion loss in July 2024—its first negative trading revenue month since 2016. The damage stemmed primarily from the firm's investment in Situational Awareness, an AI-focused hedge fund that imploded during a broader technology sector selloff, according to Reuters.

In an internal memo to employees, Jane Street executives acknowledged the "bad month" and explained that their stake in Situational Awareness had experienced a severe drawdown. The fund had performed strongly in the first half of 2024, causing Jane Street's position to grow substantially. However, July's losses erased those gains, leaving the investment "about flat on the year," though still profitable over the full investment period.

The firm's hedging strategy proved ineffective because AI stock losses accumulated gradually throughout the month rather than in a single sharp decline. Jane Street also suffered from long positions in Asian technology stocks outside the AI sector that had previously been strong performers.

Why it matters

The episode illustrates how even sophisticated institutional investors with extensive risk management capabilities can sustain massive losses when concentrated bets on leveraged funds unwind. Jane Street's experience—and Situational Awareness's near-collapse—highlights the dangers of extreme leverage in momentum-driven sectors like AI infrastructure, where rapid sentiment shifts can trigger cascading margin calls and forced liquidations.

The Situational Awareness Collapse

Situational Awareness, managed by Leopold Aschenbrenner, a former OpenAI researcher, saw its assets plummet from $45 billion at the start of July to roughly $10 billion after margin calls forced distressed sales. The fund had employed leverage as high as 400% and concentrated its public portfolio on AI infrastructure companies including SK Hynix and CoreWeave.

Prime brokers' margin calls triggered a fire sale of the fund's publicly traded holdings to Ken Griffin's Citadel, which acquired the leveraged positions at below-market prices. The forced liquidation wiped out approximately $35 billion in assets.

Following the near-collapse, Aschenbrenner made a $400 million investment in an undisclosed private company and sent a letter to investors pledging to learn from the experience.

Recovery and Risk Reduction

Despite July's setback, Jane Street's year-to-date trading revenue had exceeded $40 billion by that point, already surpassing the $39.6 billion the firm generated across all of 2025. Since the losses, Jane Street has substantially reduced exposure to the positions that caused the damage and adopted a more cautious approach across its portfolio.

Jane Street declined to comment on the matter, Reuters reported. These details were first reported by Reuters.