I'd just like to give some perspective.
In terms of who loses money: clearly the losses won't be evenly distributed. At least one fund management company profited immensely. The affected funds have already begun work hedging those positions, if possible. It has forced some of their principles to move their personal capital back in to keep them afloat. The investors of those funds will either eat the loss and stay, maybe ending the year with a positive return, or withdraw and resubscribe elsewhere. The results for non-fund "retail investors", as they're called, will depend on where they were in the informational minefield. I personally had no idea what was going on. I wasn't invested in GME. I could see some having profited substantially.
These funds have a lot of pensions plans as investors. This kind of money is called "sticky capital" in the business. It's a big deal if institutional investors subscribe, because every investment decision is large (in the millions) and expensive (a lot of time and work is done before the documents are signed). Once in, they tend not to leave unless the fund managers are deemed incompotent or not promising because of the work it takes to reallocate. There are other minutia here I won't go into.
I am, as is everyone in Canada, invested by law into the CPP. You can bet that this plan has exposure to some of the affected funds and other short sellers. Same goes for any large pool of capital immediately supported by workers aiming for long-term gains, usually retirement. They have such large portfolios to manage that they cannot invest through usual means. Funds are one of the primary ways for large investments to be made with relative safety.
There is a general drift these days, especially at these plans, to move away from reprehensible investing. Not that they and other large investors don't already participate directly, as when investing in real estate, infrastructure or debt in developing countries after the prices have been driven down by crises. In some sense, this event is part of that drift. But it leaves me feeling somewhat detached.