I can reproduce this error almost on demand (but not quite)...
I traced this down to /mnet/xmlrpc/xmlparser.php, line 89, where $data is empty, somehow, sometimes. If data is empty, $this->cipher is obviously empty too, thus breaking the rest of the code. I don't know what's causing $data to be empty there, but there appears to be something saved about it in the database that makes it permanent: if you wipe your tables, then it will work again (data will be received again). Though I don't suggest wiping your tables, as it will break the rest of mnet... (for one thing, you won't be able to replace the public key for your host).
My (wild) guess is there's a sequence that stuff should be done in ... like if the peer is in "community hub" mode when you first add it, it will work.. but if it's not otherwise prepared to accept this new peer, it won't work. (This sequence is what some documentation recommends, iirc, but if it's this critical, it should really be enforced by the system!)
This bug is made worse by the fact that it's impossible to really delete a peer.. so you can't really start over (actually, it's more like "nearly impossible" - I'm being told there might be a timeout happening at some point here, after which hosts do disappear for real)