Although it's never confirmed or shown onscreen, it's heavily implied that Count Olaf set the fire in order to execute his sinister plan of getting his hands on the family fortune. ... (Volunteer Fire Department) and it appears that Count Olaf is related to the Baudelaires through the organization — not by blood.

Did Count Olaf started the Baudelaire fire?

Unknown Cause

One major and popular theory behind the fire is that Count Olaf is the culprit. He has had a history of starting similar fires and admits to being guilty of "arson".

Who started the fire at the quagmires?

The fire was set by an unknown arsonist with a Spyglass, causing the source of the blaze to be unknown. While many theorized this could be Esmé Squalor, due to the fashionable outfit, it was later revealed that this outfit was a VFD Arsonist Disguise, leaving the true arsonist ambiguous.