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So if Franken says the 7th betaryed Rai it could mean that he betrayed Rai in a sense that the 7th is killing what is most dear to Rai.
I mean Franken is the man who once challenged 12 clan heads and even the lord. So why doesn't he let loose completely and fight like he fought Gejutel and Ragar. I mean this is his chance. He will have to show Rai that it will be enough that he fights without Rai having to step in.Besides that with Rai being asleep he can murder them in any way he wants.
My guess is that Frankenstein realizes that now isnt the best time to reveal that Rai is alive. Hes not supposed to know anything so him revealing that he knows about the betrayal would mean that he had to have gotten that knowledge from Rai himself. Franken is powerful but even he can't hope to potect his master from the union while hes so weakened.
With so much destruction being done to Korea and the children almost being killed (I doubt they'll die) it wouldnt surprise me if Rais group goes back to Lukedonia. Maybe then we might get an explanation about the betrayal.