I had the incomplete Xenology quest in my log when I reached season level 55. I claimed the reward but I was forced to turn in the quest before I could spend the cipher I already had. I thought it would be no big deal, figuring it would be at the postmaster like engrams do when you're full in your inventory.
Yes, I'm well aware that you can only have one cipher at a time on your account. That's precisely why it shouldn't allow you to complete the Xenology quest until you have the capacity to carry one.
I know this has appeared on this forum previously but I've seen nothing but player speculation regarding it or if there's any recourse, despite it being a known issue for more than half a year at least. I've read the Deleted Item and Character Policy and it's not specific enough since my inventory was not full, just a specific item. They should be treated as more important than ghost fragments and the like.
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Hey, Per policy, Bungie will not replace lost or discarded items, so there is no way to recover your lost cipher. If you find yourself in a similar situation, you don't have to accept the cipher from the quest. Even though it's not shown as an option, it is possible to dismiss the dialogue page (the Esc key is the default if you're using mouse & keyboard), buy what you need from Xur, and then return and speak to him again when there is space in your inventory. Bungie has acknowledged this as an issue they will correct in the future. For the time being, just make sure you don't already have a cipher in your inventory when collecting the one from the Xenology quest.
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If you have a spare cipher, buy an exotic from kiosk next to Vault... better than losing it...