The Exile conflict was a conflict between L’Manberg and the Dream SMP instigated by Tommy after he robbed and griefed George’s hobbit home with Ranboo as his accomplice.

After the Manberg-Pogtopia War, the Tubbo Administration was established with Tubbo as President and Tommy as Vice President. In the Greater Dream SMP, George was still the new king. On November 28, Tommy decided to rob George’s house, which he had peacefully built during the events of the Manberg-Pogtopia War. While plotting what he wanted to do, Tommy convinced Ranboo, who was still new to the server, to join him. The two gathered black leather armour for their robber outfits and proceeded to go to George’s house, spotted by Niki on their way. Before breaking in, Tommy and Ranboo took some valuables items from chests placed outside, before putting multiple offensive signs and placing random blocks around the house. However, Tommy lit one of the blocks on fire too close to the wooden roof, causing a portion of it to catch on fire. The two managed to put it out before retreating to where Niki and Puffy were on their date, hoping to blame them for the crime while also using them as an alibi.

Dream logged on to see George’s house burnt down and griefed, figuring it must have been a direct attack from L’Manberg. When Niki travelled back to L’Manberg, she found Dream placing obsidian walls around the country, and called on Puffy, Fundy, Tubbo and Ranboo to join her in approaching Dream. The group met just in time to see Dream set Jack Manifold’s house and nearby trees on fire. Dream explained to Tubbo that all the treaties between the Dream SMP and L'Manberg were null and void, as the country they were made with was forcibly overtaken by a new government. He then mentioned something about asking Tommy about his motives, and Niki deduced that the underlying reason for Dream's actions were George's house being griefed. The group checked out the damage of the house and announced they would gather the next day to resolve the conflict peacefully, but it only ended in Tommy denying everything.

The Cabinet spoke with Dream, before he requested to speak privately with Tubbo. He demanded that Tommy be exiled as a punishment for his deeds. He stated that if they don’t do so, the walls would rise and the consequences would worsen. The Cabinet, along with Karl, Ranboo and Niki, held a trial to decide on Tommy’s fate with Tubbo as the judge. After both sides presented their perspective, it was decided that Tommy would be stripped of his position in the Cabinet and put on probation, which meant reporting all his actions to Fundy. Though Ranboo was accused of being an accomplice, Ranboo revealed that he actually suffers from memory loss, not remembering well what had happened. Tommy stayed quiet about Ranboo, and took complete blame for the case against him. When the trial concluded, Dream stated that he didn't believe probation was enough for what Tommy had done, and said that he was expecting exile, but that he would give Tubbo time to think about his decision, and would meet on December 3 to discuss their terms.

For the next few days, Tommy wrote reports to Fundy, all unsatisfactory, unsurprisingly, and making things worse by gloating that he had leverage over Dream by having Spirit’s leather. On December 3rd, Tubbo, Quackity, Fundy and Tommy met on the Prime Path, all fed up with Dream’s rules but Tubbo warned them to not do anything stupid as they were already planning to declaring war on Dream, again. Tubbo explained that he didn’t want to exile Tommy, and Tommy reminded him that he didn’t have to, promising him that he would put his discs aside this time.

The Cabinet went to the obsidian walls outside L’Manberg where Dream was waiting. Tubbo didn't want conflict for L’Manberg and told Tommy that he was truly sorry, making his final decision to exile Tommy from L’Manberg. Tommy was escorted by Dream to untouched Dream SMP land. From afar Wilbur, now as Ghosbur, witnessed the exile and decided to accompany Tommy. In exile, Tommy went into a spiral of depression until he decided to move in with L’Manberg’s very own enemy, Technoblade. His exile lasted for one month and two days.

This was the start of the Reconstruction Arc and the first arc to have more than one writer, Dream, Quackity, Tommy, Techno, Tubbo and Ranboo, mostly focusing on their own characters rather than a whole story like Wilbur did. It also started other side storylines like The Eggpire, Jack Manifold and Niki’s villain arcs, Karl’s time travelling, Ranboo’s enderman side taking over, Techo and Philza’s secret organisation, Wilbur’s resurrection and more.