Right now, users are advised to not use this wallpaper, but reportedly Google is working on a fix to prevent such issues from surfacing again. Google's rep Wu Ahan confirmed it in a group that they are working on fixing the bug.
The post suggests that Google is seeking a solution to the problem but it is not sure whether the issue will be resolved or not, or if it needs to be tested first. It is also not confirmed when the fix will be released.
WARNING！！！— Ice universe (@UniverseIce) May 31, 2020
Never set this picture as wallpaper, especially for Samsung mobile phone users!
It will cause your phone to crash!
Don't try it!
If someone sends you this picture, please ignore it. pic.twitter.com/rVbozJdhkL
The problem in the photo appears to be with the color profile coded into the photo which is different from the ones used in some displays. And not all handsets face this issue, for example, the Pixel 4 works fine with the wallpaper but it messes up Pixel 3 XL. It has also been noted that Samsung phones are the most affected ones.
Bug fixed or not, if you see the above picture anywhere, steer clear from it.