The blood beetles can be seen crawling all over the arena walls and floor. They were originally intended to be as a death trap but the idea of them was scrapped from the game. Kombatants tend to step on them and squish their insides all over while fighting. Given the context of their Deception endings, it is likely that Mileena while fighting against Baraka, won the battle and fed him to the blood beetles, only to be ambushed by the real Baraka upon leaving.