I have this output. Seems like it's the same bug:
# luksformat -t ext3 /dev/loop0 
Creating encrypted device on /dev/loop0...

WARNING!
========
This will overwrite data on /dev/loop0 irrevocably.

Are you sure? (Type uppercase yes): 
Could not create LUKS device /dev/loop0 at /usr/sbin/luksformat line 63, 
<MOUNTS> line 16.

-- 
cant mount 2nd crypted partition within cryptroot
https://bugs.launchpad.net/bugs/105266
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