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confirmed with sendgrid that theres no workaround to apikey as account name. we had a siteground smtp account so configured an smtp server on it and thats working with it now (since the account name has to be in the format of something@domain.com
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Figured it out! Apparently even though "All IPv4 addresses" which includes the gateway public IP is selected, I had to change that to ONLY the gateway public IP, and afterwards it worked!