Sharad Ghai, who served as the chairman of the KCA until May 2005, had been charged on two counts of conspiring with unknown others to defraud the association of 240 million shillings (3.3 million dollars, 2.7 million euros).
Prosecutors had accused him of stealing the money that the association had raised from selling television rights to a 1999 tournament in which Kenya, India, South Africa and Zimbabwe played.
But Nairobi Chief Magistrate Aggrey Muchelule ruled that there was no evidence to prove that Ghai was guilty of the charges.
Ghai's defence was strengthened after one prosecution witness, Jimmy Rayani, the KCA chairman at the time of the tournament in question, said the association had received all the payments it was due.
"The aggrement provided for how KCA was to benefit from the arrangement and indeed benefited," Muchelule. "There is no evidence. I refuse the application."
The KCA was disbanded earlier this month and replaced with a new governing body, Cricket Kenya, after being hit by a wave of financial scandals, including Ghai's case, and mismanagement.