You are assuming there are not naked shorts out there.

There’s always a buyer on the other side of a short, naked or located. The question is whether the originating broker actually borrowed the shares.

They are supposed to verify that before they place the trade and generally do follow the rules. Because if they don’t, they will be not allowed to allow any short sales for that security.

They're illegal, and you can look at them just as the broker making a long bet themselves. Since they'll have to pay off the short seller, if the stock goes down.