"naked" in naked short selling stands for not having collateral. Its highly illegal. Its highly practised.

There are other ways too. They can use the retail shares held by the brokerage as a backing to fulfil a new order without actually purchasing it. They can use the same physical share for dozens of people who bought the shares.

This is why everyone who has GME must go and DRS (register the share directly) and obtain a certificate. Its already happening at historic levels and we are very close for all this to come crashing - GME will go to the moon, probably even escape the Wall Street and move to a blockchain based exchange.