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I think that the damage has already been done ( and is continuing to be done). You can't exactly just go back and change things now. While, you could stop everything now, there is still a chance she will eventually find out. I think that you should tell her and ask her permission to continue seeing him. Basically, no matter what you already risk the chance of her finding out in the future and having that ruin your friendship. Tell her now, while you can be the first to tell her. If anything she will respect you for coming to her and asking her instead of her finding out from someone else.
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