Iodine -> Iodide

Ryuji said:

I bet that's elemental sulfur precipitated by oxidation as Jordan predicted.

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Yup, that's what happens when you titrate iodine with thiosulfate. Whatever soluble reaction products you get end up disproportionating out into sulfur and SO2. (You may or not be able to smell the SO2 depending on the scale you're working on. It smells like freshly-struck matches.)

The tincture has cleared up. Now there are yellow crystals in its cap that look a lot like sulfur.