The DC Incident was an event during the invasion of the Prime Earth by Vyortovia from the Sepiaverse. It was was not initially thought to be part of that activity.
The publicly held story
On one of their first family missions after leaving Jason Quill behind, the remaining Quill Family members -- Byron Quill, Rusty Byrne, and Amir Quill -- confronted Achilles Chin during one of the latter's mad schemes. As the story was released to the press by AEGIS, this was a trap by Chin to kill the Quill team, by means of opening a dimensional rift that would suck them through. The plot seemed to nearly work, with Byron and Rusty being lost, and Amir barely managing to survive (though crippled) while saving their dog, Brigand. But the rift also grabbed Chin and his bodyguard, Hector Callado, presumably killing them as well.
The actual story
Achilles Chin approached Byron Quill regarding a plot by the Vyortovians to merge or swap out large sections of their planet in the Sepiaverse for our own, by use of the Keynomes. An effort to stop the transfer at the Keynome on the island of Iceland was unsuccessful, so Byron, Rusty, Achilles, and Hector attempted to remove the Keynome located underground in Washington, DC, transporting it back to the Sepiaverse without swapping a large degree of territory.
Though discovered by Vyortovian forces, the quartet partially succeeded in their plan, removing the Keynome and themselves from our Prime reality to the Sepiaverse. Amir, who was already on the other side, did not survive the effort (it is unclear if he was killed by scavengers / creatures in the Sepiaverse, or by the transfer).
While AEGIS was aware of at least part of this story, due to a security video recording in the tunnels under DC, they suppressed the information, even from Jason, while trying to further determine the Vyortovians' plan.
An effort to use the DC Keynome on the other side, in the Sepiaverse's "Federal City," to repeat the transfer was stopped by Jason and by Alycia Chin. In the process, they removed from Byron and Achilles their hyper-genius skills, leaving them as "normal" geniuses to help rebuild the Sepiaverse's Earth.
This plot was presumably motivated by and certainly coordinated with the Vyortovians, but allied to them were Hecate and (possibly brain-influenced) Achilles Chin.
- Episode 15, where Jason views the actual video of the DC Incident.
- Episode 24, where Ghost Girl and Jason travel to the Sepiaverse and meet with Byron Quill, and as described by Jason here.
- Episode 25, where Jason confronts his father in the Sepiaverse, and as described by Jason here.
- Episode 26, where Jason and Alycia deal with Byron and Chin, and as described by Jason here.