Best I could find on it without investing much time. It's exam week after all
Current Research/Hypothesis
Currently the best scientific information shows that there may be link between the tea tree oil in Melafix and toxicity in Labyrinth fish/Pencil fish, but this link is NOT what many in aquatic forums are anecdotally assuming.
The best information points to liver function, which would explain why some (such as myself) have not observed this problems in our tests, as admittedly the early studies did not initially focus on over doses or chemistry variables in the water.
Basically Tea Tree oil (melaleuca, Melaleuca alternifolia) is a phenol-containing essential oil.
Its active ingredients are cyclic terpenes which have a similar structure and action to turpentine (a known liver toxin).
The acute toxicity for the major terpenic compounds (linalool, ocimene, alpha-terpinene, 1,8-cineole, terpinolene, camphene) is 2 - 5 g/kg body weight, which is considered a moderately toxic range.
From a toxicologic point of view Tea Tree oil is comparable to oil of turpentine, which is readily absorbed from the gastrointestinal tract and then finds its way to the liver.
What may be the problem is that under certain conditions Melafix may be toxic to the liver in Labyrinth fish/Pencil fish.
My current hypothesis (based on early tests), is that since the best research shows similarities between TTO and Turpentine (both are terpenes, but then so is beta carotene), is that in an acidic environment, in particular an environment with nitric acid (which is quite possible in an aquarium), the chemical reaction can produce chemicals that may harm the liver in certain fish that have a tendency to ingest the water around them such as Labyrinth fish/Pencil fish (via the surface).
