Hypothecation and naked short selling are two completely different animals.
Hypothecation is part of the margin process. It's just a pledge of securities on the part of the investor to secure cash to fund the positions they want to carry and/or trade.
Naked short selling has nothing to do with hypothecation. It's just the short sale of a security without first doing a "firm" locate. (Or shorting other securities where no such locate is required.)
You can't really say that the brokers "took" you money. Unless... Was your trade marked "solicited" or "unsolicited"? If a broker convinced you to throw your money away on BCIT, you might have a case against them in arbitration for making unsuitable recommendations to you. But if you voluntarily threw your money away on BCIT, you can't reasonably expect to be rewarded for your mistake.
"The penny stock investor may be the most dangerous creature in the investment world, at least to himself.[...]His hypocrisy becomes most apparent when he then blames his losses on the greed of others." Robert C. Dugan, Director - JRM Capital