It sure does, but the SEC doesn't give a shit about it. The had their pow wow in Congress about GME, but no one talked about GME being short nearly 50% greater than the entire float.
There is no way in hell that AMC can trade a half billion shares with out the Market Makers selling shares that do not exist, yet they did, didn't they?
Daniel Drew is famously credited with an expression that describes the nature of short selling: "He who sells what isn't his'n, must buy it back or go to pris'n."