I’ve connected with our dev team on this and it looks you might be trying to use an older version of the cli or app packages. Two different approaches you could try are:
Run npm run shopify app generate extension and select the options interactively
run npm install @Shopify_77 /cli@latest and npm install @Shopify_77 /app@latest. After that, the original command should work.
Try either of these out and see if the error is resolved - let me know if this doesn’t work.