The Securities and Exchange Commission (SEC) has formally closed its nearly four-year investigation into electric vehicle startup Faraday Future, a development that comes despite SEC staff on the case having recommended an enforcement action against the company last year. Sources close to the investigation, who spoke to TechCrunch on the condition of anonymity, confirmed that the company and individuals involved in the probe were notified of the closure this past week.
This decision by the SEC to drop the investigation is particularly noteworthy given the rarity of such an outcome after the agency has issued "Wells Notices" – a strong indication that enforcement action is being considered. Historically, a significant majority of targets receiving a Wells Notice ultimately face legal proceedings with the SEC. A 2020 study from the Wharton School indicated that approximately 85% of entities receiving such notices end up in court with the regulator.
The SEC’s scrutiny of Faraday Future began in 2022, focusing on allegations of "false and misleading statements" made by the EV startup during its 2021 merger with a special purpose acquisition company (SPAC) to go public. Additionally, the investigation delved into claims that Faraday Future may have misrepresented or faked sales figures for its first electric vehicles in 2023. These sales allegations were brought to light by at least three former employee whistleblowers.
Over the course of the nearly four-year inquiry, the financial regulator issued multiple subpoenas to Faraday Future, as documented in the company’s regulatory filings. The SEC also conducted depositions of numerous former employees and executives in 2024 and 2025, according to individuals familiar with the case.
A significant milestone in the investigation occurred in July 2025, when Faraday Future disclosed that it and several executives, including founder Jia Yueting, had received Wells Notices. These notices are a critical pre-enforcement step, signaling that the SEC staff believes there is sufficient evidence to recommend the commission pursue an enforcement action.
In response to the SEC’s closure of the investigation, Jia Yueting issued a statement on Sunday, expressing relief and a renewed focus on the company’s strategic objectives. "We can now put all our energy into strategy execution. Over the past five years, we had to spend a great deal of time, effort, and money on cooperating with the investigation," Jia stated. Faraday Future also indicated that the SEC informed the company that no enforcement action would be taken against any of its executives.
Prior to the closure, Faraday Future had stated its intention to engage with the SEC to present arguments against enforcement. In regulatory filings as recent as February, the company indicated it had not yet formally responded to the Wells Notices, but planned to "engage with the SEC to explain why enforcement action is not warranted."
The SEC’s investigation into Faraday Future occurred within a broader context of declining enforcement actions by the agency. Recent reports indicate that in the 2025 fiscal year, the SEC initiated only four cases against publicly-traded companies, a historically low number. The SEC did not respond to requests for comment regarding the closure of the Faraday Future probe.
Further complicating the regulatory landscape for Faraday Future, the Department of Justice (DOJ) also sent requests for information to the company after the SEC opened its investigation in 2022. Faraday Future has referred to these requests as part of an "investigation" in its filings, though the DOJ has not confirmed if a formal probe was ever opened. The DOJ also did not respond to requests for comment.
The SEC’s extensive review of Faraday Future aligns with a broader pattern of the agency scrutinizing electric vehicle startups that have gone public via SPAC mergers over the past six years. In many of these cases, the SEC has reached settlements with the companies. Notable examples include the dismissal of an investigation into Lucid Motors in 2023 and the closure of a probe into the now-bankrupt EV startup Fisker late last year, as previously reported by TechCrunch.
Origins of the Investigation: A Tumultuous Journey
Faraday Future, established in California in 2014, emerged from the ambitious vision of businessman Jia Yueting, then at the helm of a burgeoning Chinese tech conglomerate, LeEco. The startup aimed to position itself as a formidable competitor in the burgeoning electric vehicle market, often drawing comparisons to Tesla. The company actively recruited talent from established automakers and major tech firms like Apple, at one point employing approximately 1,400 individuals.
The company garnered significant attention at the 2016 Consumer Electronics Show (CES) with the unveiling of a striking concept car and a bold declaration of intent to be as disruptive as the iPhone. The following year, Faraday Future revealed its first production vehicle, the luxury electric SUV FF91. However, by the close of 2017, the company faced severe financial distress, with substantial layoffs and furloughs. Jia’s financial empire in China had collapsed, leading him to self-exile in California amidst being placed on a debtor blacklist by the Chinese government. During this period, a close associate of Jeffrey Epstein reportedly pitched the controversial financier on investing in Faraday Future and other EV startups, though Epstein ultimately did not invest.
A lifeline for Faraday Future came in the form of an investment from Chinese real estate giant Evergrande. However, this partnership proved short-lived, with Evergrande withdrawing its support by the end of 2018, resulting in further workforce reductions at Faraday Future.
Jia nominally stepped down as CEO in 2019 and subsequently filed for personal bankruptcy to address billions in LeEco debt he had personally guaranteed. Despite these shifts, he reportedly maintained significant influence over the company’s operations behind the scenes.
This dynamic became a focal point when Faraday Future went public in 2021, raising approximately $1 billion through a SPAC merger. Members of the newly appointed public company board reportedly grew concerned that Faraday Future executives had misrepresented Jia’s actual control over the company’s day-to-day activities, particularly following the publication of a critical short-seller report. This concern prompted the formation of a special committee to conduct an internal investigation.
The special committee engaged an external law firm and a forensic accounting firm. Within months of commencing its work, the committee began reporting its findings directly to the SEC, according to sources familiar with the investigation.
Chronology of SEC Scrutiny and Internal Turmoil
The internal investigation and subsequent SEC scrutiny led to significant internal shifts within Faraday Future. Between January and April 2022, Jia Yueting was sidelined as a consequence of the board’s investigation. Matthias Aydt, a senior vice president who now serves as co-CEO alongside Jia, was placed on probation for six months. Jerry Wang, another vice president and Jia’s nephew, was suspended. Wang eventually resigned, citing a "failure to cooperate with the investigation," according to company filings, though he has since returned to Faraday Future.
The special committee’s findings also revealed that in the two years preceding its public listing, Faraday Future had relied, in part, on multi-million-dollar loans provided by lower-level employees with ties to Jia. These transactions are legally termed "related party transactions."
On March 31, 2022, Faraday Future publicly disclosed that the SEC had initiated its investigation. In June of the same year, the company also revealed receiving information requests from the Department of Justice.
Dodging Another Bullet: The Wells Notice and Beyond
Throughout the latter half of 2022, as the SEC investigation progressed, internal factions reportedly engaged in efforts to regain board control and influence over the company. This period was marked by allegations of death threats directed at certain board members, who ultimately resigned, facilitating the return of individuals closely aligned with Jia to leadership positions.
Faraday Future finally began delivering its first FF91 SUVs in early 2023. However, former employees have since filed lawsuits alleging that these deliveries did not represent legitimate sales and that the company had misled investors. The SEC investigators actively pursued these claims, subpoenaing Faraday Future regarding issues related to these purported sales.
Former executives and employees underwent initial depositions by the SEC in 2024. According to individuals familiar with the investigation, the SEC conducted more extensive depositions with some of these individuals during the first half of 2025.
The Wells Notice issued in July 2025 stated that SEC staff had reached 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." The notice specifically cited "purported false or misleading statements" made during the SPAC merger process concerning "related party transactions" and Jia Yueting’s "role in the Company." Jia, his nephew Jerry Wang, and two other unnamed employees also received Wells Notices.
Despite the closure of the SEC investigation, Faraday Future continues to navigate significant financial and operational challenges. The company is still attempting to sell its FF91 model, while also diversifying its business strategy. This includes importing more affordable hybrid and electric vans from China, re-badging Chinese robots for the market, and transforming a publicly-traded biotechnology company into a firm focused on cryptocurrency.
These strategic pivots have not fully alleviated the company’s struggles. Most recently, on Friday, Faraday Future announced it had received a warning from the Nasdaq stock exchange regarding its stock price falling below the minimum $1 bid requirement. This could ultimately lead to the delisting of the company’s stock.
The closure of the SEC investigation, particularly after the issuance of Wells Notices, represents a significant, albeit unexpected, development for Faraday Future. While the immediate regulatory threat from the SEC appears to have abated, the company’s long-term viability remains contingent on its ability to overcome persistent financial headwinds and execute its evolving business strategies.
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