The backup files are stored on a "fakepath" on the appliance which are not accessible to the user via CLI/API or Web interface. The backup files are not automatically removed.
The recommended advise from engineering is not to upload backup files, then not use them. Currently, the backup file is consuming <0.25% of disk space, so an insignificant amount.
A hotfix would need to be provided to clear the file system down if space became a critical issue and performance was deemed to be affected.