Hybrid Configuration - Exchange 2013 and Office 365

This is pretty old, but maybe useful for others browsing to check this out: https://social.technet.microsoft.com/Forums/en-US/25b0b80f-7578-4a85-9e99-c51317ec390a/exchange-2016-hybird

I had a VERY similar sort of error (don't think mine mentioned basic auth, else identical. Gist is, make sure your proxy's enabled and do an iisreset. Here's the forum's pith:

get-webservicesvirtualdirectory | fl Server,MRS*, if not enabled use the cmdlet below to enable.

get-webservicesvirtualdirectory |set-webservicesvirtualdirectory -mrsproxyenabled $true

Run an IIS reset..