Nice comment that sums up how it happens:

“ Technically that can be done consensually: Imagine a company has 10 shares, and you own them all. 1) You lend me 10 shares 2) I sell 10 shares to you 3) You lend me another 4 shares 4) I sell them to you as well Now the company has 10 shares total, of which you have 24 and I have -14. 140% short. Now if I actually did this I'd be absolutely insane - especially if the stock is concentrated and illiquid. You could decide to stop your stocks from being loanable. Then I would be *forced* to buy back. But as the only holder of the stock, you could decide what price you would sell at and I would *have* to buy at the price you choose. Welcome to the life of a hedge fund now short GameStop. ”