When a WebDAV virtual drive is selected and a user subsequently works with files within the container, the application leaves unencrypted copies of these files at the following path:
C:\Windows\ServiceProfiles\LocalService\AppData\Local\Temp\TfsStore\Tfs_DAV\
Yes, but this is not considered as a bug.
Protection of local files is not the main focus of Cryptomator, see also Security Target | Cryptomator Documentation. Local protection is on a best effort basis and a trade-off between usability, performance and security. If you don’t want any cacheing, use WinFSP as volume type instead. (see also Windows WebDAV cache (Tfs_DAV directory) not correctly cleaned · Issue #67 · cryptomator/cryptomator · GitHub, which mentions the WinFSP predecssor Dokany)
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