Forum profile issue: PNG avatars accepted, but shows error when saving profile

Just in case this is a uknown issue, when attempting changing avatar to a .png image (upload or url), it accepts and resizes the image to 100x100 fine, however when hit "Save Changes" button it shows

error and avatar gets deleted (even if you had previously accepted .jpg or .gif avatar, it will be gone).
So now that I have a .png avatar if I go to update my profile, I’ll have to reupload the image again after the changes were made.

But now your avatar looks fine, doesn’t it?
How did you manage it at least?

It seems avatar being saved to the profile after upload, you don’t need to press the “Save Changes” button at all.

However in the future if I decide to change/update something in my profile (not avatar), it will delete my avatar from the server with the error above.