Here's the explanation of that argument I posted a few weeks ago:

🐒 owns a 🍌. 🐍 borrows that 🍌to sell to 🦧. 🐍 wants to borrow another 🍌to sell to 🦍, but 🐒 doesn’t have any more, so they borrow it from 🦧 instead.

🐒 -lend-> 🐍 -sell-> 🦧 -lend-> 🐍 -sell-> 🦍

If that one 🍌is the only one that exists, 200% of 🍌have been shorted. 🐍 now makes double what they would have if the price goes down. 🐒 and 🦧 make money if the price goes up, but also make money from interest lending to 🐍.

But the only way the price goes down in this market is if both 🦧 and 🦍 are willing to sell a 🍌 to 🐍 at a lower price that what they bought a 🍌 from 🐍 at—and that’s stupid, why would they do that?

Normally there are enough market players to mask the stupidity of the whole situation, since there’s always someone around to make a bad trade and lose lots of money. 140% of shares being shorted means we’re no longer in that kind of normal.

If that were true it would still have been a complete clusterfuck, but it's probably not what happened. It was probably naked short selling, and the resolution was probably negotiated through back-channels so as to avoid blowing up the market.