My (23m) parents (46m, 44f) had a DNA test on my eldest daughter

My wife, Jane (22f), and I have two children. Our eldest, Melissa 4. Her conception was under horrible circumstances. We decided to keep her regardless and didn't test. Obviously I didn't explain everything to my parents and Melissa's my daughter no matter what. Unfortunately as she's gotten older she doesn't take after my side, and my parents, especially my father, did not like this. She looks like Jane's side so I've always told him that. Even if she was mine biologically she could look the same, even if less likely. But he thinks it's unnatural for her not to look like me at all, even if it's possible anyway.

He's never said it to our kids and I thought he had dropped it. But last month he decided to do a DNA test. I assume they need parent consent so he must have done something sketchy for it. Unfortunately Melissa didn't match him. I was furious because I'd told him to drop all this talk before. I've told him that if she somehow wasn't mine by blood I know about her birth and she was still my daughter either way. But he was trying to prove that Jane was a whore and I was being manipulated. I tried to end all this, but in the end Jane admitted everything. To be clear I did not want or encourage her to do this. At this point I was saying we should cut them off if they keep this up, she naively thought it would help. Obviously my parents don't believe it and are butting to 'help me'. But they're ignoring everything I'm saying at every fucking step.

At this point I'm starting to think I want to cut contact. But Jane feels guilty for causing all this even though it's not her fault. They're the only grandparents our kids will have, but I feels it's not worth it to put up with this. Is it just an overreaction? What would be a better approach if so? How can I make them understand I'm not being manipulated?