This is a powerful genjutsu known to be forbidden among the Konohagakure ninja. It targets the mind and causes the target to believe that anyone is a foe. While under the effects of the genjutsu, anyone affected will attack those who they believe to be enemies, even their closest friends. They will act completely coherent, however, almost as if it is of their own volition, but they will not listen to reason. Once defeated, they return to normal with no memory of the events. A more powerful version was cast on Konoha ninja through the use of barriers set up and maintained at four points, two of which were protected by ninja who were under the effects of the genjutsu themselves. This more potent version could not be dispelled by normal means; only by killing the original caster could it be stopped.
As Naruto: Clash of Ninja Revolution 2 did not have enough characters to use as villains who could be fought for a full set of Story Mode battles - Orochimaru, Itachi, Kisame, and Sasuke all could not appear without contradicting the story of Part II, where these characters make their first appearances to the protagonists since Part I - Soulbane was likely designed as a plot point to make the protagonist characters turn against each other in ways they would not normally, as only Kagura, Bando, and their rogue ninja forces would've been left to fight normally.