It didn't seem to use those "arms" for anything while I observed it. It moved around quite a bit and waved around constantly. I could not find it today so far.
How long is it when fully extended?
Looks like a Echlurid worm, Achaetobonellia spp. or Bonellia spp.
Harmless, detrivore, preyed uppon by butterflyfishes, angelfishes and the like.