Here’s a snapshot of the memory of a running live cd of Ubuntu. I ran a script to load 0123456789abcdef over and over and it’s clearly readable. Nothing special is required for this, as the Hypervisor has access to anything that the VM does. If the VM loads the encryption key for your disk into memory it will be available to the provider.

Dunno what rock you were hiding under but this is absolutely possible in a hosted environment. There’s even ESXi documentation on how to do it. Taking a snapshot can be detected, but can’t be prevented. These memory dumps can include encryption keys, private keys (such as SSL certificates) and other sensitive data.

Unless you can physically touch the drive with your data on it, I would not store any sensitive data on it, encrypted or not.