There's no reason why this sentence should not accept "你" in lieu of "你們".
And it should be accepted without "在".
I also was marked wrong for using 你 instead of 你们.
This is the third question in a row that I got wrong for an answer Duo should have accepted. Good lord, this is a frustrating course.
It gets more frustrating as the months wear on, with improvements seemingly having ground to a halt.
Can a native speaker comment on whether the 在 is necessary?
In the meantime, check out this video at 6:05, where the gamer says "笑什么？！你笑什么？！你别笑了！":
It is not necessary in everyday speech. But perhaps it is necessary to make it technically grammatically correct (I'm not sure)