1. Naked shorts are illegal except in very special circumstances for a market maker.

2. You don't need naked shorts for a stock to be >100% shorted.

We'd all have been better off if people took the GME frenzy as an opportunity to better understand how stock trades work, as opposed to an opportunity to reinforce their pre-existing misunderstanding.

Naked shorts are not possible with crypto unless I'm very mistaken. You could do it in some secondary market, but the blockchain AFAICT only works on "real" assets.

Which is irrelevant, we should judge things as they are and not as they "should be". Exchanges are part and parcel of the crypto ecosystem. We cannot ignore them in this discussion.

Naked shorts do exist in the crypto market and they do affect the prices of those currencies.

But of course why would anyone do that when there are a hundred easier ways to manipulate the crypto market? Buy a few influencers and UFC athletes to shill your crypto and you get a much better return on investment.

Naked shorts can and do exist on crypto exchanges

On an exchange, but not on a blockchain.

Exchanges are a convenience, and go against the entire concept of a distributed ledger. That part of what makes the whole thing a joke.