The situation Li Fan faces now is extremely dangerous. If it were just Ying Ze and Ren Yuzhi, he could still handle it.
But if it involves the Shadow Inheritor Sword...
Therefore, Li Fan cannot publicly reveal that the Shadow Bearing Sword Sect's disciples have colluded with demons. Not mentioning it means at most Ren Yuzhi and the others falsely accuse him of colluding with demons, which doesn't matter.
His main opponents are still Ren Yuzhi and Ying Ze, due to some grievances between them.
If he publicly announced this, it would no longer be a personal grievance between him, Ying Ze, and Ren Yuzhi.
Are you falsely accusing the disciples of the Shadow Bearing Sword Sect, or are you slandering Li Chengying?
Xia Yao should also understand this point. At the time, she shouldn't have spoken to Li Fan in front of Ren Yuzhi. Perhaps it was because she faced a perilous situation, found him as a lifeline, and thus wanted to tie him to the same boat.