It sounds very similar to the horse chestnut mushroom (Imleria badia, formerly Boletus badius) or the grain mushroom or the leaf beetle (Neoboletus luridiformis).

This is exactly what often happens, especially in the case of the witch’s caterpillar with leaves:

Fear of toxicity: Due to its intensely blue flesh on the cut and red stem, many casual mushroom pickers mistakenly consider it poisonous (it is often confused with the truly poisonous satanic mushroom).

Culinary value: When properly cooked, the flake mushroom is considered by connoisseurs to be an excellent edible mushroom – often even firmer and tastier than a classic mushroom.
There are also regional reservations about the chestnut mushroom, as the flesh turns slightly blue when cut.

Which mushroom do you mean exactly – the magic mushroom or another specific species?