The Megaupload saga continues with the potential erasure of data on their servers.

Data belonging to users of Megaupload could be deleted as soon as Thursday according to federal prosecutors. CBS is reporting that the company is defending itself by saying that their service was primarily used to store data like family photos and personal documents. Those users hoped they would be able to get their data back.

Megaupload hired two outside companies to store the data. As part of the investigation, the federal government froze the company’s account so they can’t pay the hosting fees.

The U.S. Attorney’s Office for the Eastern District of Virginia filed a letter in the case Friday saying that the storage companies, Carpatha Hosting and Cogent Communications Group, may begin deleting data Thursday.

The letter went on to say that the government copied some data from the servers. They have executed their search warrants so they have no right to access the data. The servers belong to the two companies so any inquiries need to be brought up with them.

Megaupload’s attorney Ira Rothken said that the company is working towards an agreement to keep the data from being erased. Not only is the data important to the 50 million customers that used the service, but it is essential for the company’s defense as well.

“We’re cautiously optimistic at this point that because the United States, as well as Megaupload, should have a common desire to protect consumers, that this type of agreement will get done,” he said.

This could complicate efforts by the Pirate Party to bring a formal complaint against the FBI for the many users who used the service for legal file storage.

We’ll keep you up to date on any developments in the Mega saga.