It's like this:

They are making a deal with the actual stock holder to "hold" their stock for them, sometimes with interest attached.

Then, what they actually do is sell stock that belongs to someone else. Sell high, then buy it back after it is low. Then they hand the stock, at the reduced price, back to the original holder. The holder doesn't care because the stock would have gone down anyways. All the risk is in the one shorting the stock. It isn't illegal at this stage. However...

What if they get greedy and intentionally tank the stock to increase their profit margin. Well, then the original holder would have a problem with that, right? How might you tank the stock? If you "hold" a whole bunch of the stock and sell it all at once, it looks like the stock is going down and others join in on the drop, selling while they can. This artificially plummets the stock to a value lower than it actually is. So, you wait until the last minute on a lot of your promises, dump them all at once, tank the stock, then buy them back for even cheaper than if you did it over a longer stretch.

The final nail in the coffin of risk comes next. What if you borrow from the guy you just sold the stock to? More profit to be made, right? As long as no one buys the stock before you, you can buy it back for the actual holder.

Then, uh oh....

People are buying the stocks up.

The price is going up.

THEY AREN'T SELLING!

YOU CAN'T BUY BACK ENOUGH STOCKS TO GIVE BACK TO YOUR HOLDERS!

YOU'VE BEEN CAUGHT COMMITTING A CRIME!

YOU LOST BILLIONS AND YOU HAVE NO MONEY LEFT!

JUMP OUT THE WINDOW!

Suicide Weekend.