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A federal appeals-court panel has overturned the convictions of two former Rabobank traders in the scandal over attempted manipulation of the London interbank offered rate, or Libor, saying the men's Fifth Amendment right against self-incrimination had been violated.

The three-judge panel of the Second Circuit U.S. Court of Appeals in New York dismissed the charges against Anthony Allen and Anthony Conti, both former Rabobank traders who were convicted on conspiracy and wire-fraud charges in November 2015.

In a unanimous 81-page ruling Thursday, Second Circuit Judge Jose Cabranes wrote that the two men's convictions were tainted because a witness against them had been aware of testimony authorities in the U.K. had forced them to provide. Essentially, that testimony was used against them, Judge Cabranes wrote, and it was "not harmless beyond a reasonable doubt."

The ruling is a blow to authorities' attempt to pursue the traders and bankers involved in the scandal over Libor, a key interest rate that international banks charge each other and a global benchmark underpinning the costs of hundreds of trillions of dollars of financial products.

More than a dozen major banks allegedly rigged Libor to benefit themselves and have paid billions of dollars in fines and settlements. At least nine people, including Messrs. Allen and Conti, have been convicted or pleaded guilty to Libor-related charges in the U.S. and the U.K. Rabobank agreed in 2013 to pay more than $1 billion in settlements to U.S., U.K. and Dutch authorities, including a $325 million settlement with the U.S. Justice Department.

Write to Michael Rapoport at Michael.Rapoport@wsj.com

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Appeals court scraps Rabobank traders' convictions - MarketWatch