Sponge coral correctly known as melithaea ochracea is a natural coral freely traded because it's not endangered.
Being porous and fairly soft makes it a challenging stone to work with. This is probably why it's rarely used in jewellery.
Most sponge coral has been stabilised because its natural tree-like structure is full of tiny holes. These were created by polyps.
When stones are stabilised they're filled with a resin or other substance to stop them eroding or crumbling. This can also be a way of strengthening or repairing the stone so it can be used for another purpose.