In this episode Matt goes really crazy and wants to kill everyone. Scott and Stiles realize that Matt is controlling the Kanima for his own vengeance. It's revealed that Matt once nearly drown because someone on the swim team threw him in the pool while drunk during a private victory party isaac's dad threw for them. Then Isaac's dad pulled Matt out of the water and made Matt promise that he'd never tell anyone.
Matt has held this secret in until now he has decided to use the Kanima to kill everyone. He would think about killing someone, take a photo of someone and the Kanima would do the rest. He took a photo of every single person that was on the swim team the day he almost drowned and the Kanima killed everyone.
Matt watched Jackson transform
The night Jackson borrowed Matt's camera to shoot himself transforming Matt connected the camera to his footage to his phone to watch what Jackson was doing. He saw with his own eyes Jackson transform.
From that moment on he befriended it to use it against the swim team.
Matt pulls gun on Stiles
Matt breaks into the police department the night Stiles and Scott convince Stiles's father that Matt is the killer but when they go into the office to get proof to get a warrant Matt pulls a gun on Stiles, his father and Scott.
He has already killed all the police officers in the department.
Gerard gets Allison amped up
Gerard gives Allison a suicide note written but her mom but makes her promise to burn it. He instigates and plays on her emotions to make sure she wants to get vengeance on Derek
"If these words were written for me I don't know how I could sit still until someone paid for her death any pity I had for Derek and his pack would be burned down by a white hot desire for retribution or a kind of blood and destruction that would gave Derek and his soles howling not for mercury but for their own sweet deaths" Gerard
Jackson knocks Derek out
Scott thinks Derek came to help which he does, but as Scott opens the door Derek immediately falls and Jackson the Kanima appears behind him.
Jackson also knocks out Stiles.
Allison now wants to kill Derek
Allison for the first time ever goes a little nuts and after reading her mom's letter she vows that she'll kill Derek and anyone who gets in her way.
Matt explains why he is using the Kanima to kill everyone
Matt begins to explain to Scott why he's killing everyone as mentioned in the introduction of this article.
Lahey, Isaac's dad, let the swim team drink which caused them to throw Matt in the pool and as he almost drown, Isaac, the swimming coach pulled him out and made him promise not to say anything saying:
"What little bastard doesn't know how to swim" Lahey
We also learn that when transgresses he can turn into the Kanima himself. Matt reveals scales forming on his body.
Scott's mom arrives and Matt puts her in the prison cell.
Gerard and Allison shoot up the place
Gerard arrives and shoots up the place along with Allison and her dad. He quotes Shakespeare beforehand saying
"Love is a smoke made with the fume of size" Gerard
Allison for the first time points the gun at Scott telling him to get out of her way. She eventually shoots the Kanima.
Scott's mom sees Scott as a wolf for the first time
Throughout the ordeal Scott can't contain himself and suddenly transforms into a wolf and Scott's mom and Scott cross eyes for the first time.
Scott runs into Gerard
Scott runs into Gerard and he begins telling him to put an end to this since he's joined Derek's pack to reveal his secrets to Gerard. Derek overhears that. Gerard then tells Scott to just leave and deal with his mom.
Gerard drowns Matt
While Matt is running away, Gerard finds hi outside and throws him into the river. The Kanima just sits and watches.
Peter Hale watches the whole thing from a distance and sees Gerard suddenly speak tot he Kanima and put his hands close to its hands saying:
"No longer afraid of the water? Now you don't have to be afraid of anything my friend, especially me" Gerard
So we learn that Gerard is now controlling the Kanima and will use it against Derek to seek vengeance for the death of Allison's mom Kate.