We have been seeing this error on a few of our customers with WatchGuard XTM firewalls. The resolution is to disable deep inspection of SMTP.
Go to Firewall > Firewall Policies > (select the policy that controls outbound email) > Proxy Actions > TLS Encryption. Uncheck everything under "enable deep inspection of SMTP with TLS" and make encryption rules optional.
Repeat for the inbound policy.
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