SFTP chroot jail

I tried to setup sftp chroot for one user independently (without looking at your configuration options). My config is different than yours, but the differences are immaterial. I have ended up with the same result when connecting using sftp. User authenticates successfully, but the client exits with:

Couldn't canonicalize: No such file or directory
Need cwd

I triple-checked the whole configuration, the directory permissions up to the chroot directory and I am fairly confident it’s all OK.

Could someone from the Turris team please help? Thanks.