From the ACWiki and a discussion here:
http://nothingtrue.livejournal.com/169757.html In 1217, Altaïr, his wife Maria and their son Darim left for Mongolia to deal with the rising and threatening Genghis Khan, and Malik was left in control of the order. Eight years later, Abbas Sofian, another high-ranking Assassin, staged a coup in which he had Altaïr's other son Sef killed and had the murder weapon put in Malik's bed; thus making everyone believe Malik was the killer. In addition, one of Abbas' spies claimed to have heard Malik and Abbas argue the same day. Abbas had Malik thrown into the prison located in the dungeons below Masyaf.[2]
Two years later, Altaïr and his family returned and Abbas tried to trick them into believing Malik was the killer. Altaïr didn't believe it, and infiltrated the prison to rescue Malik. He brought Malik, who was in a bad condition, back to their residence, where he revealed the truth about what had happened. After having made sure he was asleep, Altaïr and Maria left Malik in their residence to confront Abbas. However, in their absence, Abbas' spy Swami had killed and beheaded Malik and put his head in a burlap sack, which he delivered to Abbas whilst being confronted by Altaïr and Maria.
Altaïr, many years later, met Malik's son, Tazim Al-Sayf, and together, aided by other assassins still loyal to Altaïr, killed Abbas and ruled the Assassin Order once again, presumably with Tazim as his right-hand man.[2]
WHAT THE ACTUAL FUCK.