The short seller cannot return those shares, as he has sold them.
As you say, there is nothing illegal about this. Legal short selling is just giving the punter the opportunity to bet on the share going down. Funny how everyone applauds Burry for doing it in the big short, Tesla etc. when he identifies a looming catastrophe and has the guts to bet on it, but if you see the same opportunity in a miner and act on it you’re a p-o-s.
