**[BIS Warning: Beware of High Leverage Amid AI Frenzy]** Odaily Planet Daily News – The Bank for International Settlements (BIS), often referred to as the "central bank of central banks," issued a warning in its latest quarterly review. It highlighted that the financial vulnerabilities underpinning the current frenzy are intensifying, driven by a sharp rise in leverage and the increasing opacity of underlying debt structures. This risk alert is not unfounded. Back in July, the Situational Awareness Fund, led by Leopold Aschenbrenner, experienced a dramatic episode. The fund had heavily bet on the AI sector but faced a liquidity crisis when the valuation of its underlying assets plummeted, triggering a wave of margin calls from banks. Ultimately, it was forced to urgently transfer the core holdings of its public market stock portfolio to Citadel, the investment firm led by Ken Griffin, to barely navigate through the crisis. According to the BIS, this incident is a quintessential example of highly leveraged hedge funds deeply entangled in core markets. Frank Smets, BIS's Head of Economic Analysis and Statistics, expressed concern over cross-market leveraging activities, which can easily amplify normal market fluctuations into severe systemic shocks. The risky maneuvers of AI-themed hedge funds have once again exposed these risks.