The file was then damaged during the update today. Hopefully you have a backup of the encrypted file?
The problem here was not caused by the update of AxCrypt, since the first thing that happened was that it was not recognized.
This type of damage can happen when a file resides on a removable drive, such as a USB stick, and it is removed without using Windows Safe Removal. Resetting or crashing the system can have the same effect. It has nothing really to do with AxCrypt, it’s how Windows works.
In fact, with AxCrypt 2, we’ve done some things to mitigate this kind of situation so that if it does happen, chances are at least part of the file can be recovered. In the end though – if something happens stopping Windows from actually writing file contents to a drive, that file will be damaged.