NGINX TCP proxy with ssl_preread seemingly hangs connections

Just to be clear on your setup, there is a tunnel between the NGINX node and backend application, correct? Does that mean your NGINX config is referencing a localhost address for the proxy_pass directive? With the error you shared, it sounds like the most likely issue is with the wireguard tunnel. Can you verify that the tunnel is up and working when you see this error? It would be helpful if you could share the NGINX configuration that you are using as well.