I have the same issue.
Now I can not remove the encrypted folder. The web interface does not have the right to do this and the Android app says that “Could not complete operation. Server unavailable.”.
I do not have admin rights to erase all data from the disk and start from scratch, so I am stuck forever with my immortal encrypted folder in the cloud 
Steps to reproduce:
- Encrypt an empty folder from the desktop client.
- Copy some files to the folder.
- Nextcloud will start uploading files to the server.
- Nextcloud will hang forever (“waiting”) after uploading some files. Yes, one more bug. Bugs everywhere.
- Open the folder from the android app.
- Uncheck the encrypted folder in the desktop client to do not sync it anymore.
Congratulation! Now you have the encrypted folder that nobody can remove from any device!
UPD:
I was able to remove the folder by a total cleanup, following the instructions Help test the latest version of E2EE!