The SEC is dropping its four-year investigation into EV startup Faraday Future

The Securities and Exchange Commission has closed its investigation into electric car startup Faraday Future, despite SEC staff on the case recommending enforcement action last year, TechCrunch has learned.

Four sources familiar with the investigation, who did not want to be named to discuss the government’s case, told TechCrunch that the SEC informed the company and people involved in the investigation about the closure last week.

The dismissal of the case comes amid a historic decline in enforcement actions by the SEC, which initiated only four cases against publicly traded companies in the 2025 fiscal year, a recent report shows. The SEC did not respond to an after-hours request for comment.

The investigation into Faraday Future took about four years. The SEC was looking into whether the EV startup made “false and misleading statements” when it announced a 2021 merger with a special purpose acquisition company (SPAC), and was investigating whether Faraday Future lied about sales of its first electric vehicles in 2023 – a claim made by at least three former employees.

The financial regulator has sent multiple subpoenas to initiate, regulatory filings from the Faraday Future show. The SEC also took the positions of several former employees and managers in 2024 and 2025, three people familiar with the matter told TechCrunch.

In July 2025, Faraday Future revealed that the SEC had sent the company and several executives – including founder Jia Yueting – letters known as “Notices of Sources.” The SEC sends Notices of Sources when caseworkers decide to recommend the agency take enforcement action.

It is unclear whether Faraday Future has responded to the Wells Notices sent last year. As recently as February, the company disclosed in regulatory filings that it had none. “The company and management plan to negotiate with the SEC to explain why enforcement action is not appropriate,” Faraday Future wrote in a filing last month. A company spokesperson said on Sunday that Faraday Future would share more information later on Sunday.

The Justice Department also sent Faraday Future requests for information after the SEC opened its investigation in 2022. Faraday Future refers to this as a “probe” in regulatory filings; the DOJ has not confirmed if it has opened a full investigation, and did not respond to an after-hours request for comment.

It is not uncommon for the SEC not to pursue enforcement action after sending a Wells Notice. One study conducted at the Wharton School in 2020 showed that about 85% of the target population who received a Wells Notice ended up in court with the SEC.

The SEC has investigated nearly every electric vehicle start-up in a SPAC merger over the past six years. In almost all of those cases, the agency reached a settlement first. It dismissed an investigation by Lucid Motors in 2023, and as TechCrunch first reported in February, the SEC ended an investigation into Fisker’s botched EV startup late last year.

The origin of the investigation

Faraday Future was founded in California in 2014 by Jia, an entrepreneur who at the time ran a growing tech conglomerate in China known as LeEco. It was one of many new companies trying to be the “next Tesla” or, hopefully, the “Tesla killer.”

Faraday poached talent from Tesla, other automakers, and tech companies like Apple, and at one point employed as many as 1,400 workers. But things soon became difficult. The company turned heads, in both good and bad ways, at the 2016 Consumer Electronics Show, with a luxury concept car and a goal as high as the iPhone to disrupt.

The company unveiled its first vehicle the following year: a high-end electric SUV called the FF91. By the end of 2017, though, the company was nearly bankrupt and had laid off or laid off hundreds of employees. Jia’s company in China had collapsed, and he was exiled to California as the government in his home country placed him on the debtor’s list. (It was around this time that a close business associate of Jeffrey Epstein pitched the sex offender to invest in Faraday Future, as well as other EV startups, as TechCrunch recently revealed. Epstein did not invest.)

Faraday Future was rescued by an investment from Chinese real estate giant Evergrande. But that relationship quickly fell apart, too, when Evergrande left in late 2018 and Faraday Future laid off more employees.

Jia stepped down as CEO in 2019 and filed for bankruptcy to pay off billions of dollars in LeEco debt that he had personally guaranteed. But behind the scenes, he was still very much in charge of the company.

This became a problem when Faraday Future went public in 2021 and raised nearly $1 billion. Members of the board of the newly appointed public company believe that Faraday’s management misrepresented Jia’s control over daily operations – especially after the publication of a short report by the trader that examined Faraday Future – and formed a special committee to investigate.

That committee hired an outside law firm and a forensic accounting firm, and in 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 due to the board’s investigation, a senior VP named Matthias Aydt (now CEO and Jia) was placed on probation for six months, and another VP named Jerry Wang (Jia’s nephew) was suspended. (Wang eventually resigned after “failing to cooperate with the investigation,” according to company information, but is now back with Faraday Future.)

The committee’s work also showed that Faraday Future, two years before it went public, survived in part on billions in loans made to the company by low-level employees connected to Jia – known as “related party transactions” in legal parlance.

On March 31, 2022, Faraday Future disclosed that the SEC had opened its investigation. The startup disclosed requests for information from the DOJ in June.

Dodging another bullet

Throughout 2022, and during the early stages of the SEC investigation, employees and people close to Jia waged a campaign to regain control of his board and company. This eventually led to death threats against other directors, who eventually resigned, paving the way for people close to Jia to once again run the company.

Faraday Future finally delivered the first few FF91 SUVs in early 2023. Former employees have sued the company saying this was not a genuine sale, and that the company misled investors. SEC investigators working on the case subpoenaed Faraday Future about matters related to the sale, the filing shows.

Former executives and employees were initially fired by the SEC in 2024, according to people familiar with the investigation. The SEC has stayed some of them for longer filings in the first half of 2025, the people said.

Wells’ notice sent in July 2025 said SEC staff had made a “preliminary decision to recommend that the Commission file an enforcement action against the Company for alleged violations of various anti-fraud provisions of the federal securities laws.”

Specifically, the Wells Notice referred to “allegedly false or misleading statements” made during the SPAC’s merger process regarding “group-related activities” and “Jia’s role in 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 also recently changed its business in several ways. The company imports affordable hybrid and electric vans from China. It also appears to be selling rebadged versions of Chinese robots, and turned a publicly traded biotechnology company into a crypto-focused company.

Those efforts did not stop the company’s struggles. On Friday, the company announced that it had received a warning from Nasdaq that the stock price was below $1, which could eventually lead to the company being delisted.