Either you have an octopus or some kind of algae growing there. Hard to tell with the pic. Reach in there and grab it, it might not bite
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next time you take a picture, turn off the blues and use only the whites....
Looks like Codium Fragile to me. Not sure about the color though. http://www.saltcorner.com/AquariumLibrary/browsespecies.php?CritterID=2031&filter=0