They basically borrowed ETF shares, dissolved them, into the underlying securities and sold the GME shares to the markets which allows them to go short on GME. They keep the rest of the underlying securities or sell them too and after t+3 this becomes an FTD.

Then they either bought back GME and the other stocks that they sold out of the dissolved ETF shares or if they only sold GME, they bought back GME. They have time until t+6. If they open up put positions they can actually delay it even more to t+35.

After another 35 days they either bought back the necessary shares to create ETF shares which they need to turn back because they borrowed it OR they just just borrow new ETF shares dissolve them again. Take the GME shares and fill up the old FTDs with them and close those old FTDs while creating new ones.

OR they simply do not return the GME shares and fill them up with other stocks or a cash equivalent as the SEC allowed ETF MM (APs) to not be that accurate when it comes to balancing out the weighting of the underlying shares if some underlying securities are hard to find or very illiquid (https://www.ft.com/content/a9d04b8a-feea-4e4a-8bb8-d7681b8bcc52). Returning other shares or cash instead of the actual required shares requires the authorisation of the people that manage the ETF. But I would bet both my nuts that the people that manage XRT don’t give a flying fuck about the correct weighting and distribution of their ETF as this thing is completely rigged since more then 10 years. There once were 77 million shares of XRT in existence while only 10 million shares should be outstanding. That’s nearly 7 ETF share owners that claim the same ETF share.

After days of reading myself into this shit I’m starting to believe that the people that short GME use XRT as a loophole for naked shorting as ETFs are completely unregulated and short positions created through this fuckery don’t have to be disclosed per any file or report.