Not much of his origins are known, but it's revealed that he was worshipped as a god in ancient times. However, due to his jealous personality and powerful nature, Rithuly was banished by a group of wizards to the Dimension of Never, where he would eventually create and govern the city of Raythdom, protecting its inhabitants from other supernatural creatures of Never like the Godhounds and Mindbreakers.
Rithuly wasn't happy, however, to be stuck in that gloomy dimension, and vowed to get out of there to get his revenge against Earth's inhabitants. Athough he still hasn't escaped from his prison, it is possible for someone from another dimension to summon and make a deal with him in exchange for power. One of those beings was the magician Kesandru, who promised his soul in exchange for the power to control spirits and some of Rithuly's Rayths, which he fulfilled. The selfish necromancer, however, wasn't willing to give his soul to the demon, but knowing that Rithuly's wrath would have dire consequences, including imprisonment in his dimension, Kesandru made a house that could magically imprison any ghost that showed up there, using them as a source of power that could get the magician out of Never, while trapping the souls in Never to appease Rithuly for the trickery. However, due to a number of unfortunate circumstances (Kesandru's premature death, Creepser purposefully delaying in getting souls to the house, and, most important, the presence of the undead vampire Sam Sein) destroyed any chance for Kesandru to get out of Never.
Not much is known of Rithuly's powers, but they seems to be vast, as he is capable of keeping creatures as powerful as Mindbreakers (whose average strength is more than enough to physically overpower Bun-bun) out of Raythdom, of granting supernatural powers to anyone that summons him (even though he wasn't supposed to be able to contact other dimensions), of controlling ghosts and, most notably, of shapeshifting. The exact limits of this ability are unknown, but he usually takes the shape of a wealthy, good-looking man, a demonic spectre, or his true form of a large, dragon-like monster. Aside from his ambitious and vengeful nature, it is known that Rithuly intends to sire a child after he escapes and gets his revenge against humanity.