Alright, well, the way I see it, there's 4 possibilities as to what this 'thing' is:
1. It could be a combination of the Auditor and Tricky, which would make sense, since its red facial features on black face with the evil clownish grin kind of symbolize both Auditor and Tricky. Except that this is an incident short, which makes it non-canon.
2. It's a tribute to SCP-087, since the demonic grin looks very similar. However, the official SCP Page states that SCP-087 can only manifest in SCP-087-b, which is that infinite staircase which SCP-087 calls home.
3.It's the embodiment of Madness. Now, this is an interesting one, there's been some rumors floating around saying that in MC:11, Hank and Sanford are going to stop the madness by destroying a malevolent spirit that has been causing all this chaos from the start, A.K.A., the embodiment of pure madness.
4. It's just something completely random that Krinkels thought of one day and said "Hey, that's scary as shit. I'm gonna animate that."
Anyways, to be honest, I think the fourth option is most likely, but that's just me.
-SN