Because if they are selling to unidentified 'related parties'...

Because if they are selling to unidentified 'related parties' they still have the shares, and merely wracked up a relatively minor paper loss in $ terms. Why bother when the name of the game is accumulating from those who can't wait or otherwise must sell at a lower price which will eventually cause that loss to be returned. It's all about building a %age in a company by wounding the cap value until you own it at a time that it bursts into a mega moonshot.
They only hurt the ones they want the most. All others get the p&d.
If they are accumulating to order then the client will have plenty of shares to cover, and more than likely provided the short facility in the first place to their 'agents'.