Under the laws of California, an individual may be implicated in a criminal act based on blockchain transactions, when applied for criminal activity. For example, an individual can be charged with money laundering if they transfer or conceal illegally obtained money through cryptocurrency, which could lead to charges under California Penal Code 186.10. 

Financing terrorism or a criminal enterprise through blockchain transactions violates the California Penal Code 186.22 and other laws relating to California organized crime laws. Individuals may also face charges based on fraudulent activities on the blockchain, such as Ponzi schemes, establishing a fraudulent initial coin offering (ICO), or “rug pulls” related to non-fungible tokens (NFTs), for prosecution of fraud under California Penal Code 532. 

Any receipt or transmission of stolen cryptocurrency may be prosecuted under California Penal Code 496 concerning theft, and hacking into an account on the blockchain system may also lead to charges under this section. Purchasing, receiving, or selling illegal goods including illicit drugs, guns, or stolen credit card data using blockchain devices would be a violation of many of California’s health and safety laws, as well as Penal Code 115.0, which prohibits trafficking. 

Any failure to comply with California financial code regulations established by institutions like the Department of Financial Protection and Innovation (DFPI) or other anti-money laundering laws may lead to prosecution. Even without direct knowledge of criminal activities and receiving stolen money through a blockchain, individuals may be charged under California Penal Code 496. 

Exploiting or discovering other digital computer hacking or security vulnerabilities in smart contracts and various decentralized finance protocols (DeFi) as a means of realizing financial gain from illicit activities would produce a violation of California Penal Code 502 as a computer-related crime.

Although blockchain technology itself is legal, it can be illegal to participate in or facilitate illegal activities using blockchain, and individuals should ensure they are compliant with both state and federal laws.