The Securities and Exchange Commission (SEC) has closed its investigation into electric vehicle startup Faraday Future in a case that prompted SEC staff to recommend enforcement action last year, according to TechCrunch.
Four sources familiar with the investigation, who were granted anonymity to talk about the government’s case, told TechCrunch that the SEC notified the company and those involved in the investigation last week about the closure of the investigation.
The dismissal of the case comes amid a historic decline in enforcement actions by the SEC, which brought only four cases against public companies in fiscal year 2025, according to a recent report. The SEC did not respond to a request for comment outside of business hours.
The investigation into Faraday Futures lasted nearly four years. The SEC was investigating whether the EV startup made “false and misleading statements” when it went public through a merger with a special purpose acquisition company (SPAC) in 2021, and was also investigating whether Faraday Future falsified its first electric vehicle sales in 2023. The claims were made by at least three former employee whistleblowers.
Financial regulators sent the startup several subpoenas along with regulatory filings from the Faraday Future show. The SEC also received depositions from several former employees and executives in 2024 and 2025, three people familiar with the case told TechCrunch.
In July 2025, Faraday Future said the SEC sent a letter known as a “Wealth Notice” to the company and several executives, including founder Jia Yueting. The SEC sends Wells notices when staff working on a case decide to recommend that the agency take enforcement action.
It’s unclear whether Faraday Future responded to the Wells notice it sent last year. As recently as February, the company disclosed otherwise in a regulatory filing. “The company and its management plan to work with the SEC to explain why enforcement action is not warranted,” Faraday Future said in the filing last month. A company spokesperson said Sunday that Faraday Future would share more information later Sunday.
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The Justice Department also sent an information request to Faraday Future after the SEC began its investigation in 2022. Faraday Future referred to this as an “investigation” in a regulatory filing. The DOJ has never confirmed whether it has opened a full investigation and did not respond to an after-hours request for comment.
The SEC rarely takes enforcement action after sending a Wells notice. A study conducted by the Wharton School in 2020 found that approximately 85% of subjects who receive Wells notices end up appearing in SEC court.
The SEC has investigated nearly every electric vehicle startup that went public through a SPAC merger over the past six years. In almost all cases, the agency reached an agreement with the startup. The SEC dropped its investigation into Lucid Motors in 2023, and as TechCrunch first reported in February, the SEC closed its investigation into Fisker, an electric vehicle startup that went bankrupt late last year.
Origins of Investigation
Faraday Future was founded in California in 2014 by Jia, an entrepreneur who ran a fast-growing technology conglomerate in China known at the time as LeEco. It was one of many new companies trying to become the “next Tesla” or, more optimistically, the “Tesla killer.”
Faraday recruited talent from Tesla, other automakers, and technology companies such as Apple, and at one point employed about 1,400 people. But things quickly got bumpy. The company garnered both good and bad attention at the 2016 Consumer Electronics Show with its flashy concept cars and lofty goals to become as disruptive as the iPhone.
The company unveiled its first vehicle the following year, a luxury electric SUV called FF91. By the end of 2017, the company was nearly out of cash and had laid off or furloughed hundreds of employees. Jia’s company in China collapsed, and when his home government blacklisted him as a debtor, he went into self-imposed exile in California. (As TechCrunch recently revealed, it was around this time that a close business associate of Jeffrey Epstein suggested the sex offender invest in Faraday Future and other EV startups. Epstein never invested.)
Faraday Future was rescued by an investment from Evergrande, a major Chinese real estate conglomerate. But that relationship quickly soured in late 2018, with Evergrande leaving and Faraday Future laying off more employees.
Jia nominally stepped down as CEO in 2019 and also filed for personal bankruptcy to pay off billions of dollars in LeEco debt that he had personally guaranteed. But behind the scenes, he was still in charge of most of the company.
This became an issue in 2021 when Faraday Future went public and raised about $1 billion. Newly appointed members of the public company’s board of directors believe Faraday’s management misrepresented Jia’s control of day-to-day operations, especially after the release of a short-seller report that scrutinized Faraday Future, and formed a special committee to investigate.
The commission hired an outside law firm and a forensic accounting firm and within the first few months began reporting its findings directly to the SEC, three people familiar with the investigation told TechCrunch.
Between January and April 2022, Jia was sidelined as a result of a board investigation, an executive vice president named Matthias Aydt (now co-CEO with Jia) was placed on probation for six months, and another vice president named Jerry Wang (Jia’s nephew) was suspended. (Wang eventually resigned due to “failure to cooperate with the investigation,” according to company filings, but has now returned to Faraday Future.)
The committee’s work also showed that Faraday Future survived in part on millions of dollars in loans made to the company by low-level employees linked to Jia in the two years before its listing – called “related party transactions” in legal jargon.
On March 31, 2022, Faraday Future said the SEC had opened an investigation. The startup disclosed an information request from the Department of Justice (DOJ) in June.
dodge another bullet
Throughout the remainder of 2022 and in the early stages of the SEC’s investigation, Jia’s staff and those close to him have campaigned to regain control of the board and his company. This eventually led to death threats against some of the directors, who eventually resigned, paving the way for people close to Zia to run the company once again.
Faraday Future has finally launched its first few FF91 SUVs in early 2023. Former employees sued the company, claiming this was not a real sale and that the company misled investors. SEC investigators investigating the case subpoenaed Faraday Future on matters related to those sales, the filings show.
The former executives were first removed by the SEC in 2024, according to sources familiar with the investigation. The SEC has seated some of them for long-term depositions in the first half of 2025, the people said.
The Wells notice, sent in July 2025, states that the SEC staff has made a “preliminary determination recommending that the Commission take enforcement action against the company for allegedly violating various anti-fraud provisions of the federal securities laws.”
Specifically, the Wells notice cited “related party transactions” during the SPAC merger and “false or misleading statements” made about Jia’s “role within the company.” Jia, his nephew Wang, and two other unnamed employees also received Wells notices.
Faraday Future is still trying to sell the FF91, but it has recently changed its business in a few ways. The company is importing cheaper hybrid and electric vans from China. It also appears to be selling a rebadged version of a Chinese robot and converting a publicly traded biotech company into a cryptocurrency-focused company.
These efforts did not stop the company’s struggles. Last Friday, the company announced that it had received a warning from Nasdaq that its stock price was at least below $1, which could eventually lead to the company being delisted.
