He became a villain because he didn't read the truth but false documents after he had first doubts about his past. He thought he would be a Cetra and the human race would be the traitors. He didn't know JENOVA was an alien who killed almost all Cetra and the rest of the Cetra settled and almost lost their power to talk to the planet so they became the human race (like it is mentioned in the Ultimania Omega, being a Cetra is both cultural and racial so technically later even AVALANCHE became Cetra because the had learned to talk to the planet - of course Sephiroth absorbed the Cetra's power and abilities in the lifestream but when he found out about his past first he wasn't even thrown into the mako stream by Cloud, and of course had not just their power, no, then he even knew the truth about JENOVA and his past).