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The Theranos settlement is winding down, but Securities and Exchange Commission (SEC) enforcers will be back to Silicon Valley. Regulators follow the money. Today, they’re paying attention to where the risk of fraud is highest and bad actors are likely to be caught. Few places have the mix of promised high returns, and plentiful capital on display in the Bay Area.

The SEC has found plenty of ripe targets. Silicon Valley’s biggest startups are staying private longer, and attracting more investment than ever. As a result, they’re acting as quasi-public companies. Ethically dubious startups and rogue executives, once safely out of the public eye, are now seeing their sins publicized.

Last year, the SEC fined (pdf) insurance company Zenefits and its co-founder Parker Conrad for deceiving investors (alongside deals struck with state insurance regulators). The $980,000 penalty was the first against one of Silicon Valley’s private billion-dollar startups. This month, blood testing startup Theranos was hit with “massive fraud” charges for raising more than $700 million from investors through “an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.” CEO Elizabeth Holmes paid a $500,000 penalty, and was stripped of her controlling shares in the the once high-flying company in the settlement and barred her from serving on the board of a public company for 10 years. This week, the agency announced it had opened “dozens” of investigations related cryptocurrency and “initial coin offerings,” sending currency prices tumbling, as the SEC takes a hard look at one Silicon Valley’s hottest obsessions.

This marks a new era for SEC enforcement, in which private companies are in the crosshairs. Jina Choi, director of the SEC’s San Francisco regional office, made it explicit in an announcement this month. “The Theranos story is an important lesson for Silicon Valley,” she said. “Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.”

Yet the SEC’s newfound interest is always likely to be a rearguard effort, say agency veterans. Alma Angotti, of Navigant consulting and a former SEC regulator, says the government can rarely get too far ahead of the business community’s riskiest behavior. “We used to say in enforcement that it’s a little bit like being behind the elephant parade: You’re always going to be cleaning up,” she said in an interview. Even when they do, the most egregious actors are likely to charge ahead anyways. “You always hope it’s a deterrent, but it’s never actually a deterrent.” she admitted. “These people will alway be overly optimistic, and sometimes are crooks.”

But investors argue that high-profile crackups like Theranos are a sign that Silicon Valley is working since they’re the exception rather than the rule. In (often self-serving) Silicon Valley mythology, founders must perform a delicate balancing act of hubris and trust. To build startups with potential to grow into billion-dollar success stories, founders rarely follow (all) the rules while upending the status quo. They must weigh that hubris with the need to earn trust from their team and investors who fund their risky endeavors. Cultures can go south from the beginning.

It worked for Uber until it didn’t, and it has been the often untold story of hundreds of other lionized startups in the past. Now, Silicon Valley is pointing to breakdowns like Zenefits and Theranos to publicly redraw the line: Deceiving investors, customers and public with a product that doesn’t work as advertised is not ok.

But the line is blurry for many founders and investors. In a sense, argues Shahin Farshchi, at Lux Capital, every founder’s pitch is a willing deception. “When people talk to investors, they are presenting a vision,” he says. “What’s being presented is a fiction.” That’s the alleged magic of Silicon Valley. An idea that would be considered improbable, if not impossible anywhere else, can attract financing and talent to make it real. But only a dose of transparency prevents the fiction from becoming deceit, or worse, a crime. “Everyone is responsible,” says Farshchi, both investors and founders, to ensure that the presentation of that vision doesn’t cross the line into disastrous territory.

Theranos very clearly crossed that line, the SEC alleges. Theranos, Holmes, and former president Ramesh Balwani repeatedly misled investors with investor presentations, product demonstrations, media articles, and false statements about its technology. Theranos claimed its portable blood testing techniques could rapidly assess a variety of diseases for a fraction of the price of conventional testing with just a finger pinprick. It said it was on track to generate more than $100 million in 2014 with its products in use by the U.S. Department of Defense in Afghanistan. None of these claims were apparently true.

Of course, investors are often complicit in the charade. A herd mentality to invest in the hottest companies means many become willing accomplishes or, at least, enthusiastic backers without incentive to publicly call out bad behavior or rock the boat. Before someone has written the first check, everyone’s a skeptic. Once prominent investors have signed on, the race is on to grab a piece of the pie.

You can expect the SEC’s latest moves to give some temporary relief to Silicon Valley, says Rob Siegel, a lecturer at Stanford University and partner at XSeed Capital. He sees the pendulum swinging back toward good governance with investors insisting on more informed, rigorous oversight over startups in which executives have operated virtually unchecked. Billions of dollars in losses have chastened some in Silicon Valley, for now. But memories fade. Exuberance, and fraud, will return. “If you look at investing over last 100 years,” says Siegel,” I don’t think it’s going to go away.”

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