Because Hiruzen had become lax in his second reign and because of his obssessive want for peace; Hiruzen has hurt his own people. Homaru hates the Uchiha because they were the ones to destroy most of his clan in the Clan Wars and they never recovered, Koharu believes that the Uchihas had something to do with the Kyuubi attack, and Danzo believes the same and wants to harvest their eyes for his own use. Together they create false evidence and show Sarutobi the Uchiha coup plans. They are the ones to set up the massacre with Itachi as their fallboy.
Danzo wanted Sasuke alive so that he could get his sperm when he hit puberty and start creating a future Uchiha force at his beck and call. Naruto modified the Blood clone with seals and the Kyuubi's chakra to make fake people. He then smuggled the real Uchihas out and faked the massacre. Sasuke had his clan's bodies burned and Danzo was unable to harvest their 'eyes'.
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