Wall Street Hunts Geniuses: 36 Hours, 45 Billion Vanished into Thin Air

Author: FanCaiJu

Wall Street took all the sell orders from the AI prodigy, avoiding another crash.

This is a classic hunt by Wall Street. The whole process is as follows------

The prey is named Leopold, 24 years old this year, a German genius. He entered university at 15, graduated first in his class from Columbia at 19, and later worked on AI safety at OpenAI. After being expelled in 2024, he wrote a 165-page article predicting the arrival of AGI in 2027. With this narrative, he and seven others raised $45 billion, leveraging 4 times to bet big on AI hardware.

What happened next was more exciting than a movie.

1) Young People Don't Play Fair

Starting in April this year, Leopold did something that offended Wall Street as a whole.

The stocks he heavily invested in, such as Nebius, CoreWeave, and SanDisk, were small and initially received little attention. He pushed $45 billion with 4 times leverage into them, forcibly driving up their stock prices. In the first half of the year, he made a profit of 439%, with some early investors seeing returns of 2000%.

What does this mean?

Many institutions on Wall Street were shorting these stocks, believing their valuations were outrageous. As a result, he forced them to cover their shorts at high prices, effectively lifting him up.

A 24-year-old openly shorted traditional software stocks like Adobe, slapping the faces of all the old money, and rubbed the shorts' faces in the dirt. For three months, he was essentially defecating on Wall Street's face.

2) Wall Street Sharks Wait Patiently

The Wall Street sharks did not rush to act.

They were closely watching the biggest weakness of this "stock god": too transparent positions and too much leverage.

All major institutions knew what stocks he held, knew he was leveraged 4 times, and knew that the liquidity of his holdings was terrible, making it impossible to escape when he needed to.

This is equivalent to a gambler showing his hole cards to everyone.

The old Wall Street players exchanged glances: no rush, let the bullets fly for a while.

3) The Moment of the Hunt

In early July, the market began to hint that AI valuations were too high and a bubble was about to burst.

Who spread the news? One must look at who holds the power of discourse.

Soon after, the Wall Street sharks quietly began to sell off the stocks heavily held by SA. Initially, the declines were slow, but enough to make the leveraged gambler uncomfortable. With 4 times leverage, if the target drops by 25%, the principal goes to zero.

Margin calls began to ring.

Worse still, the traditional software stocks that Leopold shorted began to rise instead. Being hit from both sides, the 4 times leverage magnified the losses. The banks didn't care how strong your beliefs were; they only recognized whether the collateral was sufficient.

At this critical moment, Citadel's macro team added fuel to the fire, publicly stating, "A surprise interest rate hike is under discussion," even changing the baseline scenario from "no rate hike" to "rate hike." Mainstream media like Bloomberg and the Financial Times all reported it.

They openly shouted bullish expectations to the entire market.

Whether true or false didn't matter; enough panic was sufficient. SA's leveraged positions were completely crushed in the panic.

On July 29, SA was forced to liquidate by the banks.

4) 36 Hours of Carnage

Leopold urgently sought help from the market, wanting to sell over $10 billion in stocks.

But the entire market knew he was forced to sell; who would take over?

Millennium shook its head after reviewing the positions and walked away, and Jane Street, being his own investor, was also unwilling to pay a high price.

At this moment, the Citadel that spread the interest rate hike news took action.

They picked up SA's entire $16 billion public holdings.

Remember, it was all of it. Acquired at a discount, at a bargain price.

The most brutal scene on Wall Street unfolded:

Just after the trade was completed, on July 30, the Federal Reserve announced that interest rates would remain unchanged; the rate hike was a false alarm.

Leopold's held stocks surged 15%-29% that day. The stone that had been hanging over the market fell, and the "time bomb was defused," with short positions being closed one after another.

Leopold fell at the last moment before dawn.

If he could have held on for another 24 hours, he wouldn't have had to liquidate and could have made a fortune.

But he didn't have that 24 hours.

It should be made clear: Citadel did not profit from rumors; they simply stated their real judgment publicly.

An established institution with $71 billion, having experienced countless crises, against a young fund of eight people, with 4 times leverage, and all positions being transparent.

There was no need for underhanded tactics; they just needed to publicly express their views, and the market would naturally push the prey off the cliff.

This is called a strategy, not a rumor.

5) Leopold is Doomed

Wall Street is not killing AI, nor is it his judgment; it is killing the leveraged gambler.

He was right about the direction; those stocks did indeed soar, just the day after he was liquidated.

But being right in direction doesn't matter; you have to survive first.

Ken Griffin manages $71 billion, always holding a large amount of cash, waiting for moments like this when forced selling occurs. Citadel has been established for over thirty years, experiencing countless crises; while Leopold's fund has been established for less than two years, having never seen a complete bull and bear cycle.

A 24-year-old genius raised $45 billion with an article and used 4 times leverage to nearly kill Wall Street's shorts.

Then Wall Street took back all the principal and interest in just 36 hours.

He thought he was in control, but in the eyes of the big players, he was merely a temporary custodian of chips.

In Conclusion

Wall Street is truly fierce.

A 4 times PE for Hynix is belittled, while a 26 times PE for Coca-Cola looks bright. Mastering the power of minting and pricing really does turn black and white upside down.

On the same day SA collapsed, Hynix's PE was only 4 times, cheap as if it were given away. But Wall Street said it was no good, so it was no good. The media flooded with analyses of the AI bubble bursting, chip inventory piling up, and demand peaking.

Do you want to look at the fundamentals? A 4 times PE, a price-to-book ratio of less than 1, looks like a bottom by any measure.

But at that moment of being margin called, no one talks to you about fundamentals.

What’s impressive about Wall Street is that they wait until they have acquired cheap chips, then turn around and push new highs. What happened on July 30? After Citadel acquired the positions at a discount, the held stocks collectively surged 15%-29%. With cheap chips in hand and uncertainty lifted, they turned around for a round of explosive gains.

Who is buying? It’s the same group of Wall Street institutions that were frantically selling just the day before.

A hunt unfolded, SA exited, Citadel took over, and the market rebounded.

All players took their positions, and only one person was no longer at the table.

The scythe of Wall Street remains as sharp as ever.