When Othello demands "ocular proof," Iago fabricates a two-part lie:
Iago claims he heard Cassio talking in his sleep: "Sweet Desdemona, let us be wary, let us hide our loves..."—implying a secret affair.
Iago says he saw Cassio wipe his beard with Desdemona's handkerchief—the one Othello gave her as a first gift. He insinuates she gave it to Cassio as a love token.
Iago exploits Othello's insecurity as an outsider, his trust in "honest Iago," and the symbolic weight of the handkerchief. No real evidence exists—only manipulation.