If the council decided to keep Peter and John imprisoned, they would have lost the support of the Jewish people. All the ordinary Jewish people realized that a miracle had taken place and thus there would be no legitimate reason as to why the ones most directly responsible should be punished.1 Theoretically the Jewish council could argue that the teaching of Peter and John was advocating sedition (inciting rebellion against the state), but with the people being happy and praising God that accusation will not stand. Their fear of what the people will think thus prevents them from any further action against the two apostles.2
21 And when they had further threatened them, they let them go, finding no way to punish them, because of the people, for all were praising God for what had happened.