The Securities and Exchange Commission has dropped its four-year-old investigation into electric vehicle startup Faraday Future

The Securities and Exchange Commission has closed its investigation into electric vehicle startup Faraday Future, even though SEC staff in the case recommended enforcement action last year, TechCrunch has learned.

Four sources familiar with the investigation, who were granted anonymity to speak about the government’s case, told TechCrunch that the SEC notified the company and people involved in the investigation of the closure last week.

The dismissal of the case comes amid a historic decline in enforcement actions by the SEC, which filed just four cases against publicly traded companies in its 2025 fiscal year, a recent report showed. The SEC did not respond to a request for comment after business hours.

The investigation into the Faraday Future case lasted almost four years. The SEC was looking into whether the electric car startup made “false and misleading statements” when it went public in 2021 in a merger with a special purpose acquisition company (SPAC), and was also investigating whether Faraday Future misrepresented sales of its first electric cars in 2023 — an allegation made by at least three former employee whistleblowers.

The financial regulator sent the startup multiple subpoenas and regulatory filings from Faraday Future. 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 revealed that the SEC had sent the company and several executives — including founder Jia Yueting — letters known as “Wales Notices.” The SEC sends Wells Notices when staff working on a case decides to recommend enforcement action to the agency.

It is not clear whether Faraday Future responded to Wells’ notices sent last year. Last February, the company revealed in regulatory filings that it had not done so. “The company and its executives plan to engage with the SEC to explain why enforcement action is not warranted,” Faraday Future wrote in such a filing last month. Faraday Future will share more information later on Sunday, a company spokesperson said on Sunday.

The Justice Department also sent Faraday Future requests for information after the SEC opened its investigation in 2022. Faraday Future has referred to this as an “investigation” in regulatory filings; The Justice Department never confirmed whether it had opened a full investigation, and did not respond to a request for comment after business hours.

It is rare for the SEC not to take enforcement action after sending a Wells Notice. One study conducted at the Wharton School in 2020 showed that about 85% of targets who received a Wells Notice end up in court before the SEC.

The Securities and Exchange Commission (SEC) has investigated nearly every electric vehicle startup that has gone public in a SPAC merger over the past six years. In almost all of those cases, the agency reached a settlement with the startups. It declined to investigate Lucid Motors in 2023, and as TechCrunch first reported in February, the SEC ended its investigation into bankrupt electric vehicle startup Fisker late last year.

Principles of investigation

Faraday Future was founded in California in 2014 by Jia, an entrepreneur who at the time was running a thriving technology conglomerate in China known as LeEco. It was one of many new companies trying to become the “next Tesla” or, more optimistically, the “Tesla killer.”

Faraday poached talent from Tesla, other automakers, as well as technology companies like Apple, and at one point employed as many as about 1,400 employees. But things quickly got complicated. The company turned heads, in good and bad ways, at the 2016 Consumer Electronics Show, with a flashy concept car and a lofty goal of being as disruptive as the iPhone.

The company unveiled its first car the following year: a luxury electric SUV called the FF91. By the end of 2017, though, the company was running out of cash and had laid off or furloughed hundreds of workers. Jia’s company collapsed in China, and he exiled himself to California, where the government in his home country placed him on a blacklist of debtors. (At the time, a close business associate of Jeffrey Epstein pitched the sex criminal to invest in Faraday Future, as well as other electric car startups, TechCrunch recently revealed. But Epstein never invested.)

Faraday Future was rescued by an investment from major Chinese real estate company Evergrande. But that relationship also quickly collapsed, with Evergrande pulling out by the end of 2018, and Faraday Future laying off more staff.

Jia nominally stepped down as CEO in 2019 and also filed for personal bankruptcy to settle billions of dollars in LeEco debt that he personally guaranteed. But behind the scenes, he was still largely in charge of the company.

This became an issue when Faraday Future went public in 2021 and raised about $1 billion. Newly appointed public company board members believe Faraday executives have misrepresented Jia’s control over day-to-day operations — particularly after the publication of a short report on the vendor that vetted Faraday Future — and have formed a special committee to investigate.

That committee hired an outside law firm and a forensic accounting firm, and within the first few months it began reporting its findings directly to the Securities and Exchange Commission, the three people familiar with the investigation told TechCrunch.

Between January and April 2022, Jia was sidelined as a result of a board investigation, a senior vice president named Matthias Aidt (who is now co-CEO with Jia) was placed on probation for six months, and another vice president named Jerry Wang (who is Jia’s nephew) was suspended. (Wang eventually resigned after “failing to cooperate with the investigation,” according to company filings, but has now returned to Faraday Future.)

The committee’s work also showed that, during the two years before it went public, Faraday Future managed to survive in part thanks to multimillion-dollar loans made to the company by low-level employees with ties to Jia — known as “related party transactions” in legal parlance.

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

Dodge another bullet

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

Faraday Future finally delivered the first few FF91 SUVs in early 2023. Former employees have filed a lawsuit against the company, claiming that these were not real sales, and that the company misled investors. SEC investigators working on the case subpoenaed Faraday Future on issues related to those sales, filings show.

The former executives and employees were initially removed by the SEC in 2024, according to people familiar with the investigation. The SEC sat some for longer filings in the first half of 2025, the people said.

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

Specifically, Wells’ notice cited “allegedly false or misleading statements” made during the SPAC merger about “related party transactions” and “Jia’s role in the company.” Jia, his nephew Wang and two other employees who were not named also received Wells notices.

Faraday Future is still trying to sell the FF91, but has recently changed its business in several ways. The company imports hybrid and electric trucks at reasonable prices from China. It also appears to be selling rebadged versions of Chinese bots, and turning a publicly traded biotech company into a cryptocurrency-focused company.

These efforts did not stop the company’s struggles. The company announced Friday that it had received a warning from the Nasdaq stock exchange that its stock price was below the $1 threshold, which could ultimately lead to the company being delisted.