I had always thought of the second possibility. I agree with Plawrence here. Fredo didn't seem to be willing to cooperate with Roth and Ola anymore. He even told Ola to never call him again. Unless he found out about the stupid comment he made at that stage show and thought Roth is his only option to escape Michael's vengeance. But do you think he find out before that kiss of death? I guess not.