We have pretty conclusive proof they were trying to make him into the Russian Guaido. There's a clip going around from 2013 claimed to be either Navalny himself or the director of his "anti-corruption" fund (either way makes no difference) that shows them asking a British MI6 agent for 10-20 million dollars in order to plan, in their own words "mass protests, civil initiatives, propaganda, establishing contacts with elites".

My bet is that the West decided now that he was going to serve a decades long sentence for numerous crimes he was no longer worth anything as an asset and they burned him. They did it at an opportune enough moment to create distraction from unfavorable developments and try to use this along with the fearmongering story they ran about Russian space nukes to get the US Congress to give them the money for more weapons to Ukraine.