Ephraim is one of the oldest souls in the Netherrealms, stemming from the time when souls were still being reborn indefinitely and never returned to the Pool to be reformed into a young soul.
When he tries to save his daughter from mental trauma by interfering with her dreams, he is taken to be judged and reformed by Tallulah, Queen of the Dream Domain. His pleas that he was only trying to help his daughter seems to fall on deaf ears, and he is kept in a dream state cell while waiting for his sentencing. As a result, his body is in a coma back on Earth.
After a few weeks of deliberation, he is taken out of his cell and told that he is condemned to Reforging for the crime of interfering with another person’s dreams. When he screams that his daughter needs him, Tallulah goes quiet and says, “Your daughter has since passed on.”
This sends Ephraim into a rage and a fight ensues. Tallulah being the main target of this attack, is killed, together with many others. Ephraim himself is shocked at what he has done. Ashamed, wounded, but enraged, he flees.
He lays dormant in a quiet part of the realm for tens of thousands of years, not quite healing from his (mental) wounds and developing a bigger and bigger remorse for what he’s done. He develops a grudge against Natives, who don’t understand Humans and should not be allowed to rule them. While brooding, he sustains himself by dream sharing with a few people every year, validating his fears and becoming stronger because of it.