David, Thanks for finding this issue with the cryptmount-setup script. I'm currently looking into a fix that will form part of the next upstream release of cryptmount.
In case you haven't already found a work-around, the cryptmount man-page describes (in the "example usage" section) a recipe that roughly matches the steps in the setup script. If you follow that man-page entry from the line "cryptmount --generate-key 32 opaque" (changing "opaque" to the name of your encrypted filesystem), that should allow the setup process to complete. Cheers, RW Penney