Swift Error when using PHP's mail() function

[Dhaerow888]

Prestashop 1.7.6.1.
Mailer suddenly stopped working. It might have been related to changing the passwords for our ftp accounts. Test email works while using PHP's mail() function.
SMTP doesnt work any way I set it.

Even when I am just using PHP's mail this is the error I am getting:
Swift Error: Failed to authenticate on SMTP server with username \"\" using 2 possible authenticators
Also I am not sure where is this username being pulled. 
I dont have this username set in Prestashop contact settings.
I tried replacing swiftmailer directory with clean one. Nothing helps.
I have never changed any code.
It used to work  like two weeks ago before the passwords changed any ideas?