Is OTHER wrong in the post ? POST : First I am sorry for the length of this post.

I am a 30 y/o male and my wife is 28 y/o. We have been together for almost 10 years now, 5 of them which we have been married for. A little background about me. I have been a work in progress coming from an abusive family (father's side) with heavy drug issues. I use to have severe anxiety and emotional issues and got tired of living a scared life so I started to take back some control of myself. I went to therapy for 6 years, recently graduated and got my bachelors after my GED and just got accepted into grad school. My wife is everything I would want in a wife and mother for possible children in the future. 

Her sister has never liked me, just plain. She is someone who has caused her family a lot of financial harm, racking up tens of thousands in clothing/credit bills that they have paid for her. Recently she, for the second time and without anyone's knowledge, was married to a guy she met in college in order to help get him a passport (non-American citizen). She was out on a business trip, which she does frequently, and left her with him and he ended up sexually assaulting her (under 13). I have noticed that my sister-in-law has been using gas-lighting like behavior that makes me feel like I am going crazy. My wife does not like conflict but recognizes what her sister is "doing behind the veil" as she puts it, but does not know how to confront or deal with it. For example, college talks for the niece recently came up between the four of us (wife, sister-in-law, niece and I) and my wife asked what she was thinking of doing. The niece said her desired field in IT possibly, and my sister-in-law immediately chimed in with a thinly veiled acerbic tone of "Oh, you can be just like your uncle" - dead silence for a few moments until my wife attempted to make it into a nice comment. For a little background, I was at a small party where we all were and I remember one of my sister-in-law's friends come up and start speaking to me about my job being "low-tier IT" with a lot of assumptions. I've never spoken with this person before. I had to explain to him that I was a database manager at a big company and he had heard this stuff from the sister-in-law, so naturally I attribute the silence to some behind the scenes talks. Since then I have noticed that the sister-in-law's friends have been very awkward towards us any time we are at joint gatherings. On a few occasions within the last year our niece has hugged my sister-in-laws friends but did not hug either my wife or I. She still seems to enjoy our company and speak to us but it is very strange. 

Outside of the sister-in-laws circle we have a very healthy social life with and appreciate our people. Though my wife has had her own observations that have bothered her for the last year, but hasn't done anything about it because she doesn't know what to do. Am I the asshole for trying to have her do/say anything about it? I feel crazy and am doubting myself.
