Palytoxins exist in some soft corals called polyps and are common in the hobby, but poisoning from them is extremely rare and is easily avoidable. The toxin is used as defense mechanism for this coral and they should be viewed as an animal. When they are exposed to conditions that are deadly to them, they can release the toxin, but these don’t happen under normal circumstances. Exposure to the toxin can happen if the polyps are left in air for extended periods of time, exposed to extreme heat, are cut out of water, or are consumed as food. None of these scenarios typically happen to your average hobbyist. Rare cases have happened when the coral was left out to dry, a piece of live rock was boiled to disinfect it, accidental consumption, or by fragging. The process of fragging polyps (breaking up colonies for propagation) is best left for trained experts. For your average reefer, just use some common sense practices of not handling them with open cuts, washing your hands after handling, and not exposing them to the environments that are deadly to them mentioned here!
If you have more concerns about polyps in your aquarium, talk to an Into The Blue team member!