It's called Hallucigenia because researchers have scratched their heads over where it fits among life forms since its fossil was discovered in the Burgess Shale of Canada's Rocky Mountains in the early 1970s...More at the Washington Post. The full manuscript was published in Nature.
A new study of the claws at the end of all those legs revealed... an oddity observed in at least one other place, the weird jaws of velvet worms, which, in the university's synopsis of the report, "are no more than legs modified for chewing."..
The finding is a big deal, said Javier Ortega-Hernandez, a co-author of the study, because it turns what is known about the evolutionary tree of arthropods -- spiders, crustaceans and insects -- on its head. "Most gene-based studies suggest that arthropods and velvet worms are closely related," Ortega-Hernandez said. But "our results indicate that arthropods are actually closer to water bears," he said.