Your guess is as good as mine. Without wading into spoilers, the game's main events are shaped by several individuals pursuing Kuro, the Divine Heir. As Wolf, you are sworn to protect him as he has the power of the Dragons Blood and can grant immortality. It's possible Lady Butterfly was persuaded to join forces with the Bandits to seize power for herself, or it is also possible that she was under the influence of another individual and decided to join the dark side. FromSoftware tends to be very vague with their games narratives and instead encourages players to dive deep into the lore by studying the environments around them and doing their own homework. With Lady Butterfly, I believe they purposely wanted it to be up to the player's interpretation.