Gatenmaru

was a moth demon and the leader of a group of human bandits, who were initially unaware that he was a demon.

History
It's unclear when he became or for how long Gatenmaru was the leader of his horde of bandits. However long it was, he kept quiet the fact he was a demon, though it's unclear why (probably just to keep his flunkies around). In fact, after witnessing him feed, some of his men said they had always wondered where the women Gatenmaru "entertained" went, which would indicate he did go to some lengths to protect his secret, at least in terms of meeting his nutritional requirements and hiding the evidence. Regardless of his secrets, he had developed a good rapport with his men, and they seemed proud of and confident in him and his seemingly human abilities.

During the Story
Gatenmaru had the misfortune of raiding a village that Inuyasha and Co. had just passed through, so when the scent of human blood and smoke hit the air, they were quick to back-track and return to their aid. By the time Inuyasha and Miroku arrived (Kagome, Shippō and Sango had stopped to help a boy who'd been injured), all but a handful of women and an old man (the injured boy's grandfather) had been mercilessly slaughtered—even most of the livestock. Inuyasha and Miroku were both quick to detect a demon among the bandits, and Inuyasha, knowing who it would probably be, called their leader out with a swing of Tessaiga.

Gatenmaru answered the challenge, though he wasn't pleased when Inuyasha openly referred to him as a demon. When this happened, murmurs passed through the bandit ranks as they asked one another if they knew what Inuyasha was talking about. Pretending he hadn't noticed their reaction, Gatenmaru left the demon comment unaddressed and instead demanded Inuyasha surrender the Tessaiga. When Inuyasha told him to get real and attacked, Gatenmaru met his strike with a parry from his enormous battle ax. Tessaiga overcame his own strike, however, and chipped off a lower portion of his weapon. Despite the circumstances, this only pleased him more and increased his desire for the sword.

Now knowing his ax wouldn't cut it, Gatenmaru took a change of tack and used one of the women as a human shield. When Inuyasha faltered, the demon took advantage and breathed his debilitating poison powder on him, then cut him with his ax to get it into his system. He then encased both Inuyasha and Miroku in a deadly poison cocoon that disintegrated anything it touched, separating Inuyasha from Tessaiga in the process.

Having seen Gatenmaru's demon powers firsthand, the horde of bandits were struck dumb by them, which led him to ask if they were afraid of him now that they knew what he was. He was pleased when instead of being scared, his men were even more excited about working for him than ever. (Whether he was merely amused or genuinely relieved by their acceptance of him is unclear.)

He soon discovered that Inuyasha and Miroku were still alive inside the cocoon, thanks to an impromptu barrier created by the latter. Gatenmaru was amused by this attempt at thwarting the inevitable. He then ordered one of his men to bring him Tessaiga, which naturally rejected his full-demon grasp. He then learned why it did so, and though displeased, he found amusement in the fact that a hanyō had the gall to challenge him.

At this point he decided to let the would-be heroes be an audience while he took his share of the spoils. He made them watch as he sucked out all of a woman's blood with his tongue. Though his men were definitely creeped out by this as well (with one of them realizing aloud what happened to all the women he "entertained"), none of them were completely repelled by it, either.

When Kagome, Sango, Shippō, Kirara and the injured boy arrived, Gatenmaru's men were able to overwhelm them with their numbers (Inuyasha-tachi's stance on never killing humans also played to their advantage as well.)

It was at this time that Gatenmaru sealed his fate. For when Miroku's barrier finally failed and Gatenmaru announced that he would kill and devour Kagome, Inuyasha reached his limit, lost himself to his demon blood, and burst out of the cocoon at full-power.

Unimpressed by Inuyasha's transformation into the mindless, primal beast within, Gatenmaru himself transformed into his true moth demon form. After surrounding Inuyasha in a vortex of his poison dust, he fell from the sky when the hanyō effortlessly escaped it and shredded his wings with his claws. He then desperately tried to re-encase Inuyasha in another cocoon, only to fail and fall utterly victim to his crazed opponent.

Powers & Abilities

 * Poison Powder/Dust: Gatenmaru was able to breathe a dusty poison at his enemies. It was potent enough to dissolve the skin on Inuyasha's cheek and render him mostly paralyzed when it entered his system. When Gatenmaru was in his moth form, he was able to release large amounts of it from his wings and spread it by flapping them around.
 * Poison cocoon: Gatenmaru was able to release waves of poisonous and acidic silk that wrapped around his enemy to make a cocoon. It was potent enough to melt through a bandit's sandal and burn the skin on the heel of his foot. (Oddly, though, the cocoon didn't melt the trees that Gatenmaru built the cocoon around.)
 * Transformation: Gatenmaru could transform into a gigantic demon moth. His strength and abilities greatly increased during this time.

Trivia

 * Gatenmaru had a brother named Garamaru, who appeared in Episode 100. Apparently, Gatenmaru's drinking of human blood was considered deviant behavior among his kind, so much so that Garamaru didn't even feel compelled to avenge his brother's death. In fact, he ridiculed Inuyasha for even insinuating that that was his motive for killing them.
 * His seiyuu also voiced Daisuke in Rumiko Takahashi's previous work Ranma ½.