This might be a bit tricky because people generally tend to map binary data sequences to representations of real-life objects automatically, often conveniently slipping to lax and negligent assumptions. What is often left out is the importance of encoding, which is the essence that gives data a meaning. Without encoding, it's just a meaningless bitstream.
Now, the thing with the encoding is that, given a "right" encoding, you can basically turn any binary data into arbitrary "image" (or text; or give it any other meaning). Even this answer might be considered to convey an illegal material, if a carefully-crafted encoding scheme is used to interpret it.
When questioning the legality of binary data, a highly motivated prosecutor could surely come up with an encoding scheme which, when used to interpret the data in the Blockchain, would reveal an illegal material. However, a reasonable judge would probably dismiss it because it isn't the natural encoding intended to be used in the protocol. I'm not a lawyer, but I believe the intent would be a key factor here, so people using Bitcoin (and sharing the Blockchain) should not be prosecuted if they're only using it for the intended purpose, interpreting the data as specified in the Bitcoin protocol. Otherwise, anybody using the Internet could be prosecuted for anything.
On the other hand, a person who inserted such a data on purpose (re-encoding them to a compatible format and sending as a transaction output), could probably face a criminal prosecution, if reliably found.
Disclaimer:
I'd like to add that law is not an exact science (actually is not exact nor science) and thus might be hard to grasp for technical people who strive to always find definite answers. Also, all decisions might be politically or otherwise motivated.
I don't think there is space for images in the blockchain (I could be mistaken) but you could add an "illegal number" like
09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 .. .. ..easily enough. – LateralFractal – 2013-10-25T04:40:26.0032Can you make it illegal to operate a package delivery service by shipping child porn or other illegal content? – David Schwartz – 2013-10-25T05:22:41.463
@DavidSchwartz Your comparison is lacking. A better comparison would be "Can you make it illegal to receive a delivery of 1000s photos, containing a small number of child porn or other illegal content I wasn't aware of and didn't notice?" Then yes, it's possible. – SK19 – 2018-03-20T20:24:46.173
3
So, 4 years later... This happened: Child abuse imagery found within bitcoin's blockchain
– JPhi1618 – 2018-03-20T20:59:33.737