Unfortunately the initial gcrypt repository layout had to be changed after git-annex version 4.20130920. If you have an encrypted git repository created using version 4.20130920 or 4.20130909, you need to manually upgrade it.

If you look at the contents of your gcrypt repository, you will see a bare git repository, with a few three-letter subdirectories, which are where git-annex stores its encrypted file contents:

27f/  branches/  description  hooks/  objects/
HEAD  config     f37/         info/   refs/

In the example above, the subdirectories are 27f and f37.

All you need to do to transition is move those subdirectories into an annex/objects directory.

mkdir annex ; mkdir annex/objects ; mv 27f f37 annex/objects

Probably those are the only 3 letter things inside your git repository, so this will probably work:

mkdir annex ; mkdir annex/objects ; mv ??? annex/objects