The full-back is on his way out of Stamford Bridge.
It looks as though the first player to leave Chelsea after the exit of Jose Mourinho is not going to be a household name, however a player that was once tipped to be one.
The report claims the two clubs are in advanced talks and next Thursday his registration will be released by Chelsea in order for him to leave and head back to Brazil.
The talented right-back arrived at the club in 2013 from Fluminense, where he had emerged as a top young talent.
The Brazilian Under-20 international has however not featured for Chelsea since his move, which reportedly cost Chelsea around £5 million, according to The Sun.
He is currently on loan at Serie A side Carpi and had a previous spell in Italy with Inter Milan. His best period as a Chelsea player came during a stint with Vitesse Arnhem in the 2014-15 season.
However Wallace still does not have a work permit to play in the UK and he does not have a future in the side.
A move back to Brazil appears to make sense for the 21-year-old full-back.