All the characters assume that the person manipulating Cayden James would be one of the people currently working with him because it had to have been someone who knows him well. Because the person manipulating him began doing so before his current operation began, their assumption is faulty. The person would have had to have known him (either personally or from a distance) prior to Cayden's current operation so people who knew him before, such as Alena, should be suspects.
While killing Cayden James, Ricardo Diaz reveals himself to be the mastermind of it all, still it was not clarified how Diaz was going to stop James from detonating the bomb and burning entire Star city. It was just a matter of hours, and even earlier if James had got reasons to do detonate earlier. So, Diaz's claim of "why burn the city when you can take it over" rings hollow.
Oliver says to James that James had intentionally surrendered as he might be having yet another card up his sleeves to destroy Star City, but with summary murder of James, that angle got buried undisclosed.