They store undelivered, encrypted messages on the server.
> This document describes the Sesame algorithm for managing message encryption sessions in an asynchronous and multi-device setting.
But if you are doing regular messages between people, those messages are certainly readable by the server and because adding a new device decrypts all previous messages, the server has decryption knowledge.
Note: At each point in their sesame algorithm the user has a non-empty set of devices. So if you want to sync another device acts as a p2p syncer.
What happens when you remove your last device and add another new one. Hence why whatsapp has a non-privacy mode. Or am I misunderstanding?
If you switch devices, other clients will use the old keys until they have received the new one (and then they will silently re-encrypt and resend undelivered messages, something WhatsApp was heavily criticized for).
WhatsApp is NOT any different. They may have Signal's encryption algo, but they still store effectively unencrypted messages in their servers. Because that is the only way to sync between devices when adding a new device. And also the only way for FB to data mine.
So... Yeah bad reporting.