My understanding is that it IS encrypted, and its supposed to use the Signal protocol (Signal developed it and released it for others to use)
The problems are with
- metadata (like the other comment explained)
- closed source, so we take their word on it for how it works. It's possible they're being misleading or doing something shady
See this image from a few years ago:
Note that signal does require this, which isn't in the chart:
- phone number (for now)
- last active date
- sign up date (I think)