OK, here's a rough draft. It's basically a downsized kraken with a modified water elemental's Vortex attack bolted on:
Sea Demon
Huge Magical Beast (Aquatic)
Hit Dice: 12d10+48 (114 hp)
Initiative: +2
Speed: 30 ft. (6 squares), climb 10 ft., swim 40 ft.
Armor Class: 20 (-2 size, +2 Dex, +10 natural), touch 6, flat-footed 20
Base Attack/Grapple: +12/+28
Attack: Tentacle +18 melee (1d8+8)
Full Attack: 6 tentacles +18 melee (1d8+8) and bite +13 melee (3d6+4)
Space/Reach: 15 ft./15 ft. (30 ft. with tentacles)
Special Attacks: Constrict 1d8+8, crushing embrace, improved grab, vortex
Special Qualities: Darkvision 60 ft., ink cloud, jet, low-light vision, spell resistance CR+6?, water dependent
Saves: Fort +12, Ref +10, Will +7
Abilities: Str 26, Dex 14, Con 19, Int 11, Wis 16, Cha 11
Skills: 30 Climb +16, Escape Artist +, Hide +, Listen +, Spot +, Survival + (+), Swim +16
Feats: 5
Environment: Warm aquatic
Organization: Solitary
Challenge Rating: ?
Treasure: Triple standard
Alignment: Always chaotic evil? Always evil, usually chaotic?
Advancement: 13-15 HD (Huge); 16-36 HD (Gargantuan)
Level Adjustment: —
Combat
An opponent can attack a sea demon's tentacles with a sunder attempt as if they were weapons. A sea demon's tentacles have 10 hit points each (20 hit points for a Gargantuan sea demon). If a sea demon is currently grappling a target with the tentacle that is being attacked, it usually uses another limb to make its attack of opportunity against the opponent making the sunder attempt. Severing one of a sea demon's tentacles deals 5 points of damage to the creature. A sea demon usually withdraws from combat if it loses four tentacles. The creature regrows severed limbs in 1d10+10 days.
Constrict (Ex): A sea demon deals 1d8+8 points of damage with a successful grapple check.
Improved Grab (Ex): To use this ability, a sea demon must hit an opponent of any size with a tentacle attack. It can then attempt to start a grapple as a free action without provoking an attack of opportunity. If it wins the grapple check, it establishes a hold and can constrict.
Ink Cloud (Ex): A sea demon can emit a cloud of jet-black ink in a 60 foot spread (80 feet for a Gargantuan sea demon) once per minute as a free action. The cloud provides total concealment, which the sea demon normally uses to escape a losing fight. All vision within the cloud is obscured.
Jet (Ex): A sea demon can jet backward once per round as a full-round action, at a speed of 200 feet. It must move in a straight line, but does not provoke attacks of opportunity while jetting.
Vortex (Su): Once every 10 minutes, a sea demon can use its tentacles to stir the sea into a whirlpool. The sea demon must be underwater to create a vortex. It can sustain a vortex for up to 1 round for every 2 HD it has. The sea demon can move through the water or along the bottom at its swim speed while creating a vortex. The vortex is 5 feet wide at the base, up to 30 feet wide at the top, and up to 50 feet tall (60 feet for a Gargantuan sea demon). The sea demon controls the exact height, but it must be at least 10 feet.
The sea demon's movement while it uses its vortex attack does not provoke attacks of opportunity. Another creature might be caught in the vortex if it touches or enters the vortex, or if the sea demon moves into or through the creature's space.
Creatures one or more size categories smaller than the sea demon might take damage when caught in the vortex, and may be swept up by it. An affected creature must succeed on a DC24 Reflex save when it comes into contact with the vortex or take 2d8 bludgeoning damage. It must also succeed on a second Reflex save or be picked up bodily and held suspended in the powerful currents, automatically taking damage each round. An affected creature is allowed a Reflex save each round to escape the vortex. The creature still takes damage, but can leave if the save is successful. The save DC is Strength-based.
Creatures trapped in the vortex cannot move except to go where the sea demon carries them or to escape the whirlpool. Creatures caught in the whirlpool can otherwise act normally, but must make a Concentration check (DC 10 + spell level) to cast a spell. Creatures caught in the vortex take a -4 penalty to Dexterity and a -2 penalty on attack rolls. The sea demon can have only as many creatures trapped inside the vortex at one time as will fit inside the vortex's volume.
The sea demon can eject any carried creatures whenever it wishes, depositing them wherever the vortex happens to be.
If the vortex's base touches the bottom, it creates a swirling cloud of debris. This cloud is centered on the sea demon and has a diameter equal to half the vortex's height. The cloud obscures all vision, including darkvision, beyond 5 feet. Creatures 5 feet away have concealment, while those farther away have total concealment.
Those caught in the cloud must make a Concentration check (DC 15 + spell level) to cast a spell.
A sea demon cannot use any other attack while it is creating a vortex and does not threaten the area around it.
Water Dependent (Ex): Sea demons can survive out of the water for 1 hour per 2 points of Constitution (after that, refer to the drowning rules).
Skills: A sea demon can change colors, giving it a +4 racial bonus on Hide checks. A sea demon also can squeeze and contort its body, giving it a +10 racial bonus on Escape Artist checks. A sea demon has a +8 racial bonus on any Swim check to perform some special action or avoid a hazard. It can always choose to take 10 on a Swim check, even if distracted or endangered. It can use the run action while swimming, provided it swims in a straight line. A sea demon also has a +8 racial bonus on Climb checks, and can always choose to take 10 on Climb checks, even if rushed or threatened.