Naked shorting does not happen in the OTC. The reason? It is a fully automated market, and every single share that is traded is recorded in a database, so finding situations where shares were sold that were not bought would be as simple as having a program looking at all the trades. They do have that, you know and if any naked shorting was happening, it would stand out like a sore thumb.
EVERY SHARE is recorded as to who sold it and who bought it. So, no naked shorting in the OTC. Only an MM 'could' do it, but they would be caught almost immediately and face steep fines.
I guess most traders don't understand what 'automated' means. It means there are NO PEOPLE filling orders, and computers are not going to decide to do naked shorting on their own, to make a few partial cents on penny stocks.
Don't know what ever happened to common sense, but the wild claims I see here all the time are mostly not even possible. It reflects on the understanding of how the market even works.
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