You assume a legitimate market. Dark pools used to be called upstairs trading which by definition is off the books. So retail has no idea what's going on. It works like this Fund A has an uncomfortable short position in a security, he contacts Fund B who has the stock, but may have an uncomfortable position in a stock that Fund A owns they sell their positions Dark.....even though this is a simplification of complicated transactions I think you can get the picture.
Your short squeeze you have been calling for will only happen if an extraordinary event takes place, ie, buyout or large sale, even then losses are mitigated by the fact that many of the shares short are hedges against a long position.
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