...some exchange wanted to keep flow going and kept issuing BTC to people like the Winklevoss' that were withdrawing and the market kept going up at an incredible pace (and now the exchange is short BTC)...
I don't understand. How can you issue BTC you don't have?
YOU CANNOT. Unless, you use the numbers from the "deposits" (which ARE NOT yours to use) When someone deposits, the money goes into the exchange (it should be segregated but in the failures of exchanges it does not seem to have been (even corzine was not doing seg properly). If you were doing this, you are basically "borrowing" others money and using it to short to make the commission to keep the flow going).