Not at all. Even a cash-settled option contract is pegged to the cost of the underlying asset at expiration. If the underlying security is significantly above the strike price, then the seller of the contract is out the difference and the buyer of the contract wins. The underlying bets are the same, the underlying risks are similar.
The only real difference is that if indeed the option results in the delivery of the underlying asset, then the seller MUST purchase the asset for ultimate delivery to the buyer of the contract at whatever price is required to obtain the asset. This "spot" price could be much higher than any average, nominal, or close price of an asset at the time of contract expiration. To limit such losses, contract sellers standing to lose start buying early to avoid the rush ... that pushes up prices and decreases float.
Normally, Cash-settled options are used where the underling asset is not an easily transferred asset (like an index future ... there is no index asset to transfer and no real ownership of the index price ... not to be confused with an index fund which is a equity security that can be owned). For ordinary assets like publicly traded shares of stock, the asset is indeed delivered.
My "whole theory" is simply this: markets are risky, some market plays can be very risky. If you are going to engage in risky behavior, you must suffer the consequences of losing just at you would enjoy the benefits of winning. Nothing illegal happened in the underlying transactions ... the problem occurred when the so-called "system" intervened to protect some players at the expense of others. That is just plain crony-ism at its worst.
I meant your whole theory about getting squeezed to deliver shares would go sky high.