No they didn't. Naked short selling is different from short selling while the short interest is high.
Seller A borrows a share, sells it to buyer B. Buyer B then leases the share to Seller C, who then short sells it. This is not a naked short, but a plain ol' short sale.
A naked short would be where Seller A doesn't own a share, but sells one to Buyer B anyway, with a contract stipulating the time the seller must buy and deliver the share. With the exception of market makers, this is illegal but ridiculously easy to detect, since Seller A's sales exceed the number of shares purchased. There is zero evidence any of the hedge funds were short selling.
Do you mean, this is legal for market makers?
Is there any other way that the number of shares being shorted, could be greater than the number of shares in existence?
Yes, market makers are allowed to sell short without having a locate.
It should be noted that the market makers will attempt to zero out their total exposure by the end of the trading session.
Yes. They need to be able to make naked shorts, as this is what allows traders to buy a share without having a willing seller at any given moment and vice versa.
> Is there any other way that the number of shares being shorted, could be greater than the number of shares in existence?
As I mentioned, It's perfectly cromulent to have multiple non-naked shorts on the same shares, so the short interest as a percentage of float can certainly exceed 100% without any illegal behavior. I imagine the reason for this misconception is that people think of a short as an "anti-share" that can't exceed the number of shares being traded, when it's really a more abstract investment tactic or contract.
It may be in the national interest to impose "reserve requirements" on brokerages in order to prevent too much perversion of market prices.
[1] https://en.wikipedia.org/wiki/Enron_scandal#Timeline_of_down...