These cores first appeared during the Black Fiend School incident. The School's Master and his clone, the Emperor of Yue, were cultivating a techniique called Divine Blood Light, but as this technique did not allow one to create a core the evil duo created an alternative method to form one with these Five Elements Blood Cores.
The Five Elements Blood Cores were formed within the bodies of cultivators who practiced the Fiend Demon Art, much like how a demonic beast condense a core within their body.
They give a cultivator a chance of 1/3 to form a Fiend Core. This False Gold Core would be similar to a genuine Core Formation cultivator's gold core, but cultivator would be slightly weaker than normal Core Formation cultivator and would have no chance to progress past early Core Formation Stage.
Han Li gave them to Crooked Soul who became his clone due to the External Reincanation Art and made him form a fiend core.