Art done by the very cool  shikaro go check them out!

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A..."What If" sort of scenario we'll call it. Due to getting in over his head for a variety of reasons, Chili ends up turned into a demon, just in time for spoopy month! While he's still his old self, newfound power has gone to his head, not helped by demonic influence so he's far more mean spirited and conniving than usual. His bracelet is a piece he picked up off his first prey after transforming, and through some tweaks he's able to use it to hold onto the souls of those he manages to devour, which he gradually absorbs for a power boost.

Consider this an entirely separate individual from the character that shows up in the normal story commissions. Any time you see this appearance, it's serving as a sort of one-off bit of chaos.