I am having the exact same issue when attempting to add an image to "Square logo image"... the https://main.iam.ad.ext.azure.com/api/LoginTenantBrandings/0 endpoint that is being called in the background is responding with an error response payload:
{"ClassName":"Microsoft.Portal.Framework.Exceptions.ClientException","Message":"The image stream does not have a vaild image format.","Data":{},"HResult":-2146233088,"XMsServerRequestId":null,"Source":"Microsoft.ActiveDirectory.PortalExtension.ADExtension","HttpStatusCode":400,"ClientData":{}}
I am providing a valid PNG file... so, I don't understand what the problem is. In addition.. "valid" is spelled incorrectly in the error message.