Naked shorts are outright illegal and unethical as it's the same as robbery.
Covered shorts depends if the lenders are ethical and restrict themselves to only lend those shares which they are the beneficial holders and not the ones which they are just the nominee. I doubt lenders are ethical. So if they lend shares own by clients who are long to their other clients who want to go shorts, then stealing is involved whether the borrowers know it or not.
ISF Price at posting:
9.4¢ Sentiment: LT Buy Disclosure: Held