Hello. My name is Marc. I'm a licensed attorney, experienced in contract and employment law, and I will be happy to assist you.
That's quite a dilemma you have! Let me see if I understand it correctly first:
You work for 1 and 2.
1 and 2 have a relationship, but each is a distinct organization.
1 told the members of 2 that the members of 2 must divest from 2.
1 has no business telling the members of 2 what to do.
Therefore, you continue to work for 2, while still working for 1 also.
Someone at 1 asked you if you're still involved with 2.
2 doesn't want you to reveal to 1 that you are still involved with 2.
You would rather not tell 1 that you are still involved with 2.
But you feel compelled to provide an answer.
There are two ways to analyze this catch 22: logically and pragmatically. I'll do both.
Logically, if you tell 1 that you are still working at 2, then you will offend both 1 and 2. You will offend 1 because 1 doesn't want you to be working at 2; and you will offend 2 because 2 doesn't want you to tell 1 that you are working at 2. Therefore, if you disclose to 1 that you are at 2, you could lose both jobs. Thus, you have a conflict of interest which mandates a decision: whether you want to work for 1 or 2. You can no longer work for both. As such, if you prefer 2 over 1, then you must not answer 1's inquiry.
Pragmatically, I sense that you prefer to work for 2 rather than 1. You've described 1 in a way that indicates that you do not approve of its conduct (trying to destroy 2). Perhaps, therefore, 2 is the better organization to work for if you must choose.
I understand, however, that you would rather not have to choose. But the fact of the matter is you have clear instructions from 2 not to disclose your involvement with them. The fact that 2 has retained counsel indicates that it is very sensitive and serious about its position and that it has a strong basis for its instructions not to disclose. On the other hand, there seems no legitimate basis for 1 to require you to divest from 2 or to require you to disclose that you are still working at 2.
Of course, you cannot lie and tell 1 that you are not working at 2. So alternatively, consider answering 1 in the following manner: "I am pleased to continue working hard for the benefit of [insert whatever cause(s) 1 and 2 have in common]." This way, you're answering honestly that you are working in the same field and/or for the same cause, but without actually naming 2.
I wish you luck in handling this dilemma and I hope both 1 and 2 resolve their differences peacefully. Please let me know if you have any further questions. Otherwise, if I have helped you to better understand your issues and options, please be sure to rate my answer, since that is the only way I can receive credit.