I think what happened was that, as Montal says, chills and locks don't stop trading--DTC doesn't have the authority to stop trading--BUT those trades need to be settled.
We've discussed in the past how some of the larger discount brokers continued to trade BCIT after the DTC lock was imposed. Probably they thought that because they had clients actively trading the stock, they could cross those trades and settle them. In the end, the SEC suspended buyin requirements, so that wasn't necessary.
Shareholders of penny stocks often seem to feel the regulators, DTC, and the brokerages should know and understand everything that's going on with "their" stock down to the last detail. That isn't necessarily the case. The regulators don't know something's wrong until someone tells them. They didn't get that information until very late in the game with BCIT.
The bottom line is that sometimes--and not very often--there are hopeless screwups. BCIT and GVRP were among them. But what happened can't be blamed on any single entity or individual. The SEC was faster to move with GVRP, in part because many of us who were playing the stock contacted them. In the end, the regulators did what they believed was in the best interest of the markets.
DTCC is neither evil nor incompetent. It deals with billions of dollars worth of securities of all kinds daily. Penny stocks are not a priority; they're a nuisance. But cases like BCIT and GVRP are very, very rare. Nothing similar has happened since. So I'd say the system works nearly all the time.
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