What would beware of the Greeks bearing gifts refer to?

The line is actually:

Equo ne credite, Teucri. Quidquid id est, timeo Danaos et dona ferentes

Do not trust the horse, Trojans. Whatever it is, I fear the Danaans (Greeks) even bearing gifts.

It was spoken by the Trojan priest of Poseidon, Laocoon, who was trying to warn the Trojans that the Horse left by the Greeks might be a ploy.