The premise of the question is wrong. The speed of sound has no relation to how it is attenuated. If the sound originates from underwater, it doesn’t sound muffled. For example, underwater speakers actually sound quite good. While scuba diving, if you tap your diving knife on your tank to get another diver’s attention, it makes a clear ringing sound.
The interface between water and air does attenuate sound. Water is much more dense than air, so vibrations in air molecules are not able to induce the same vibrations in water.
Sound that originates in air sounds muffled underwear because water is denser than air and it’s hard for the air molecules to transfer their vibration to the water.
Sound that originates underwater sounds quite clear underwater (and contrary to what some comments theorize our ears work perfectly well underwater). You can experience this in pool with underwater speakers.
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