Who started using beetle bug blood for red velvet cake?

Answer 1

No one. Red velvet cake is really chocolate cake with a bit of red food dye added.

ANS2:Nobody. Carmine dye does not come beetles, it comes from scale insects...a whole different Order. Specifically, it is extracted from the cochineal, an insect found in Mexico and South American. The dye was first used for dyeing cloth. It became an important trade item in the 1500's. We'll probably never know the name of the innovator because of the loss of the historic records from the indigenous people during the conquest by the Europeans.