https://www.investopedia.com/terms/n/nakedshorting.asp
Despite being made illegal after the 2008–09 financial crisis, naked shorting continues to happen because of loopholes in rules and discrepancies between paper and electronic trading systems.
Per SEC regulations, participants in naked short selling activities can be charged with a crime. In fact, in 2014, two Florida State University professors were charged with using a naked short selling strategy in 20 companies to earn more than $400,000 in revenue. In 2018, there was widespread speculation that naked shorting was endemic in the cannabis sector as shares were highly sought after and thus limited, but short interest continued to grow regardless.