The author of this article has fundamental misunderstandings about how markets work.

Let’s say their trading customers have 5,000 shares of the S&P that are long and 10,000 shares of the S&P that are short. The 5,000 longs and 5,000 of the shorts cancel each other out. If the market goes up, the longs make the money the shorts lose. Well, what happens to the extra 5,000 shorts? They’re losing money right? But there is no actual trade in the live market, so when the shorts close their positions at a loss, the broker pockets that money. Making a profit off the loss of their customer.

If there are 5,000 long and 10,000 short, yes, the 5,000 long and short cancel each other out, but the remaining 5,000 short BORROWED those shares from someone who is long. The brokerage isn't taking a long position of 5,000 shares against those shorts. That's simply not how it works.

There are cases where people didn't have to borrow the 5,000 shares to sell them at today's price in hope of buying back later at a lower price. Where the 5,000 short position isn't "real". It's called "naked shorting". There is no evidence that brokerages are letting shorts borrow shares that don't exist to naked short Bitcoin. If they did, and the market moved the wrong way (meaning Bitcoin went way down in value), it means the shorts "sold" those 5,000 shares at a high price, pocketed the money, and then "bought" the shares back at a much lower price, keeping the difference. This would be the brokerage's loss, and could make them go insolvent.

I would take this article down asap.