Penny stocks can be shorted. Just not by typical retail. Offshore brokers and MMs do it daily. When MMs do it, it's called naked short selling. They fill orders without ever even locating the borrowed shares first
106M outta 117M shares traded today were short. Theoretically, that means a total of approx. 11M shares were sold by people wishing to bail. That's not a terribly high number, IMO.