Not an expert at all but the way WSB explains it, it’s where hedge funds trade GME back and forth between each other, gradually lowering the price with each trade. It’s a coordinated effort toy manipulate the market and is illegal. According to WSB the SEC either doesn’t care or fines hedge funds so little for stuff like this that it’s worth it to them to do it anyways (as well as selling naked short and under reporting short interest). As I said, I have been watching what WSB is doing for entertainment value so all of this is suspect.

I’m 90% sure that this is just something WSB made up and isn’t actually evidence of manipulation. Seeing as you can look at the order books for almost all exchange traded stocks and see similar trading patterns. (Unless you believe that all stocks are being manipulated, which is a stretch.)

How do they sell a public stock back and forth between each other? How could one fund put shares up at a given price (especially one below the current bid price) and ensure their partner fund is matched as the buyer?

Wouldn’t a market maker need to collude as well?

Not saying it’s not true, I genuinely curious as to the mechanics.

Presumably, fund A places a limit buy at price - $n and fund B places a limit sell at price - $n - $0.1

But what about all the other bids and asks in the book? If you’re trying to drive the price down, there will be buy orders at higher prices your sell order will be matched with first.

Apparently it was happening in the over the counter markets. No idea how that would work but the lack of oversight may make it easier.

The SEC is on the hook to investigate anything reported to them. If they aren't investigating, then it's not being reported. Additionally, there is an incentive to report shady behavior(such as wash sales to lower price, as you described): https://www.sec.gov/whistleblower

tldr; the SEC pays you a portion of any fine they levy against an entity.