I started testing binaries from the release history page:
https://launchpad.net/ubuntu/+source/grub2-signed/+publishinghistory

The last working one is:
https://launchpad.net/ubuntu/+source/grub2-signed/1.116
https://launchpad.net/ubuntu/+source/grub2-signed/1.116/+build/17166212/+files/grub-efi-amd64-signed_1.116+2.02+dfsg1-12ubuntu3_amd64.deb

The first broken one is:
https://launchpad.net/ubuntu/+source/grub2-signed/1.117
https://launchpad.net/ubuntu/+source/grub2-signed/1.117/+build/17277557/+files/grub-efi-amd64-signed_1.117+2.04-1ubuntu1_amd64.deb

So indeed 2.02 works and 2.04 doesn't.
I will check if the problem affects other distributions as well.

** Summary changed:

- Grub 2.04 Out of memory error, No server error
+ loopback command hangs in 2.04 under UEFI

** Changed in: grub2 (Ubuntu)
   Importance: Undecided => Critical

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https://bugs.launchpad.net/bugs/1851311

Title:
  loopback command hangs in 2.04 under UEFI

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