In an effort to protect Oliver, Nancy gives up the name of one of Fagin's gang. When Fagin finds out, he is furious. He wants Nancy to be silenced, and punished, and so when he tells Bill Sikes about Nancy's betrayal, he lies and says, or at least heavily implies, that Nancy has also informed upon Bill. Fagin says that Nancy has "give(n) up all her pals," and that Nancy has revealed "what house it (is) that (they all) meet at." To make Bill even angrier, Fagin also tells him that Nancy has given up all of this information "without a threat, without a murmur," the implication being that she was only too pleased to give up her friends.
Bill is also led to believe that Nancy has been drugging him in his sleep so that she can sneak out in the evenings. Fagin's spy, Noah, tells Bill that he has heard Nancy confess to giving Bill "a drink of laudanum."
Upon hearing all of this Bill is overcome with a murderous anger. He rushes back to his home, where Nancy is asleep. When he gets home he pulls Nancy out of her bed and into the middle of the room. He calls her a "she devil." Nancy protests that she has been "true" to him, but Bill is too angry to think clearly and chooses to believe Fagin's lies to the contrary. Bill strikes her twice across the face with his pistol and then clubs her to death.