I had the same problem but I was confused with @Vladislav's answer and couldn't seem to find the solution from that. Of course, my problem may not be exactly the same as I encountered the problem when trying to upgrade XAMPP, but it also gave the same Error 1067 message.
With further search I found this:
The answer from that is straightforward, that is, to completely clean up the folder, which doesn't always happen. As in regards to XAMPP, I guess I backed up the necessary files first (data folder from mysql folder and the htdocs folder). Uninstall XAMPP. Check the xampp folder for any content that remains and delete everything. You may want to reboot afterwards, just in case. Then reinstall XAMPP. Copy the backed-up folders back to their respective places, and hopefully, mySql will work again in XAMPP.
This should solve the issue.