From the looks of it Kajin fear of losing to his brother made he say that he's brother had a demon in him in front of a crowd of very impressionable people which believed him because he was already certified by basically anyone who know him this "good news" then spread which helped give birth to a demon version of the MC with the same memory and looks because some people would think he is a demon (Chinese whisper) this finally give birth to the evil spirit which then swallowed the source of the resentment Kajin imprisoning he but not killing him until he get hes own body which he has bulid up power for over the pass 500 years through people which also solidified he as the big bad evil over 500 and yeah. Let me know if I missed anything