I think what you're talking about is locking up shares so they are not available for anyone to borrow and short. We're talking about a different situation. There have been (and generally always are) shares for sale on the offer that are not displayed. So for example, the guy showing 25k gets hit for his whole size, but still displays 25k. It's called a reserve order. It allows a trader to set a displayed number and hide the rest, then the size will refresh to 25k every time it's hit, until the order is done. The reserve feature is available on etrade pro, but not for OTC stocks. So the MMs selling the hidden shares are able use the reserve feature on their platform.
Now, back to what you described about shorting. This subject has come up numerous times over the years I've been trading OTC. The way I understand it, it doesn't matter if a long "locks up" his shares by putting them for sale above market price.
The only way to prevent your shares from being borrowed is by having a non-margin account. If you have a margin account and hold shares, it doesn't matter if you have them up for sale or not, they can still be borrowed and shorted somewhere else.
There are conflicting opinions on this shorting subject. I will look for the article that describes what I just explained. It's somewhere on the other site, ugh.
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