Using a warrant (or call option) to protect a short position is certainly legal. That is simply a financial offset. But that has nothing to do with the share borrow.
They supposedly have to borrow shares regardless of the warrants.
OTOH, I strongly assume these guys flaunt US securities laws regularly wrt illegally shorting ahead of deals. Many have been fined by the SEC, but those are basically wrist slaps.
Why do you think most keep their ops and cash in the Caymans?
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