This doesn’t mean it’s a bad format or that it shouldn’t be used. In fact, it should still be the default unless you need something it doesn’t support or really need to reduce file size.
I rather disagree. I’ve switched to lossless WebP for all my needs. There are practically no drawbacks and I get a smaller file.
VeraCrypt Volume Format Specification:
It may be possible to recover the encryption key. You might try asking on VeraCrypt forums/mailing lists or contacting a commercial data recovery service which understands VeraCrypt. Though I’m not familiar with VeraCrypt so I may be misunderstanding the cited documentation.