Failing to start Docker on W10 machine, exit code 1

Hello everyone,

I’m trying to install Docker Desktop for Windows on W10 machine. After the installation completed, I had to sign out and sign in again. Then, even before trying to open Docker, I got the following error:

System.InvalidOperationException:
Failed to deploy distro docker-desktop to C:\Users\othma\AppData\Local\Docker\wsl\distro: exit code: 1
 stdout: 
Copyright (c) Microsoft Corporation. All rights reserved.
Usage: wsl.exe [Argument]

Arguments:
    --install <Options>
        Install Windows Subsystem for Linux features. If no options are specified,
        the recommended features will be installed along with the default distribution.
        To view the default distribution as well as a list of other valid distributions,
        use 'wsl --list --online'.
        Options:
            --distribution, -d [Argument]
                Specifies the distribution to be downloaded and installed by name.
                Arguments:
                    A valid distribution name (not case sensitive).
                Examples:
                    wsl --install -d Ubuntu
                    wsl --install --distribution Debian

    --list, -l [Options]
        Lists distributions.
        Options:
            --online, -o
                Displays a list of available distributions for install with 'wsl --install'.

    --help
        Display usage information.

 stderr: 
   at Docker.ApiServices.WSL2.WslShortLivedCommandResult.LogAndThrowIfUnexpectedExitCode(String prefix, ILogger log, Int32 expectedExitCode) in C:\workspaces\master-merge\src\github.com\docker\pinata\win\src\Docker.ApiServices\WSL2\WslCommand.cs:line 146
   at Docker.Engines.WSL2.WSL2Provisioning.<DeployDistroAsync>d__17.MoveNext() in C:\workspaces\master-merge\src\github.com\docker\pinata\win\src\Docker.Engines\WSL2\WSL2Provisioning.cs:line 168
--- End of stack trace from previous location where exception was thrown ---
   at System.Runtime.ExceptionServices.ExceptionDispatchInfo.Throw()
   at System.Runtime.CompilerServices.TaskAwaiter.HandleNonSuccessAndDebuggerNotification(Task task)
   at Docker.Engines.WSL2.WSL2Provisioning.<ProvisionAsync>d__8.MoveNext() in C:\workspaces\master-merge\src\github.com\docker\pinata\win\src\Docker.Engines\WSL2\WSL2Provisioning.cs:line 77
--- End of stack trace from previous location where exception was thrown ---
   at System.Runtime.ExceptionServices.ExceptionDispatchInfo.Throw()
   at System.Runtime.CompilerServices.TaskAwaiter.HandleNonSuccessAndDebuggerNotification(Task task)
   at Docker.Engines.WSL2.LinuxWSL2Engine.<DoStartAsync>d__29.MoveNext() in C:\workspaces\master-merge\src\github.com\docker\pinata\win\src\Docker.Engines\WSL2\LinuxWSL2Engine.cs:line 190
--- End of stack trace from previous location where exception was thrown ---
   at System.Runtime.ExceptionServices.ExceptionDispatchInfo.Throw()
   at System.Runtime.CompilerServices.TaskAwaiter.HandleNonSuccessAndDebuggerNotification(Task task)
   at Docker.ApiServices.StateMachines.TaskExtensions.<WrapAsyncInCancellationException>d__0.MoveNext() in C:\workspaces\master-merge\src\github.com\docker\pinata\win\src\Docker.ApiServices\StateMachines\TaskExtensions.cs:line 29
--- End of stack trace from previous location where exception was thrown ---
   at System.Runtime.ExceptionServices.ExceptionDispatchInfo.Throw()
   at System.Runtime.CompilerServices.TaskAwaiter.HandleNonSuccessAndDebuggerNotification(Task task)
   at Docker.ApiServices.StateMachines.StartTransition.<DoRunAsync>d__5.MoveNext() in C:\workspaces\master-merge\src\github.com\docker\pinata\win\src\Docker.ApiServices\StateMachines\StartTransition.cs:line 67
--- End of stack trace from previous location where exception was thrown ---
   at System.Runtime.ExceptionServices.ExceptionDispatchInfo.Throw()
   at Docker.ApiServices.StateMachines.StartTransition.<DoRunAsync>d__5.MoveNext() in C:\workspaces\master-merge\src\github.com\docker\pinata\win\src\Docker.ApiServices\StateMachines\StartTransition.cs:line 92

I have enabled hyper-V and WSL2 and restarted prior to the installation. I also tried adding administrator to docker-groups in Computer Management.

By the way, I have a 64-bit Windows 10 Pro, version 21H1, build number: 19043.1288.

Any tips how to fix this?