You could restrict how much one stock can be shorted. This situation should have never arisen - it only happened because one firm was holding on to a ridiculous

You could restrict how much one stock can be shorted. This situation should have never arisen - it only happened because one firm was holding on to a ridiculous amount of risk. They gambled, someone noticed and posted about it. Either you restrict how much one can gamble with stocks, or you accept that allowing infinite profit carries infinite risk. Anything else is in effect saying "only the rich are allowed to exploit market conditions and get richer", which is obscene.