The United States seized $7 billion in Afghanistan's frozen assets belonging to the previous administration on Friday, as President Joe Biden said he aims to split the funds between 9/11 victims and aid for Afghanistan, to the outcry of the Taliban.

The seizure drew an angry response from the country's new leaders the Taliban, which branded the seizure a "theft" and a sign of U.S. "moral decay."

Biden's unusual move saw the conflicting, highly sensitive issues of a humanitarian tragedy in Afghanistan, the Taliban fight for recognition, and the push for justice from families impacted by the Sept. 11, 2001 attacks collide, with billions of dollars at stake.

The first stage was simple: Biden formally blocked the assets in an executive order signed Friday.

The money – which a U.S. official said largely stems from foreign assistance once sent to help the now-defunct Western-backed Afghan government – had been stuck in the New York Federal Reserve ever since last year's Taliban victory.

The insurgency, which fought U.S.-led forces for 20 years and now controls the whole country, has not been recognized by the U.S. or any other Western country, mostly over its human rights record.

However, with appalling poverty gripping the country after decades of war and the previous government's rampant corruption, Washington is trying to find ways to assist, while side-stepping the Taliban.

The White House said Biden will seek to funnel $3.5 billion of the frozen funds into a humanitarian aid trust "for the benefit of the Afghan people and for Afghanistan's future."

The trust fund will manage the aid in a way that bypasses the Taliban authorities, a senior U.S. official told reporters, countering likely criticism in Washington that the Biden administration is inadvertently boosting its former enemy.

Aside from the new plan, "the United States remains the single largest donor of humanitarian aid in Afghanistan," the senior official said.

More than $516 million has been donated since mid-August last year, the official said. The money is distributed among nongovernmental organizations (NGOs).

The Taliban fumed over Washington's move.

"The theft and seizure of money held/frozen by the United States of the Afghan people represent the lowest level of human and moral decay of a country and a nation," Taliban spokesperson Mohammad Naeem said on Twitter.

Failure and victory are common throughout history, "but the greatest and most shameful defeat is when moral defeat combines with military defeat," Naeem added.

9/11 victims seek compensation

The fate of the other $3.5 billion is also complex.

Families of people killed or injured in the 9/11 attacks on New York, the Pentagon and a fourth hijacked airliner that crashed in Pennsylvania have long struggled to find ways to extract compensation from al-Qaida and others responsible.

In U.S. lawsuits, groups of victims won default judgments against al-Qaida and the Taliban, which hosted the shadowy terrorist group at the time of the attacks, but were unable to collect any money. They will now have the opportunity to sue for access to the frozen Afghan assets.

Those "assets would remain in the United States and are subject to ongoing litigation by U.S. victims of terrorism. Plaintiffs will have a full opportunity to have their claims heard in court," the White House said.

A senior official called the situation "unprecedented."

There are "$7 billion of assets in the United States that are owned by a country where there is no government that we recognize. I think we're acting responsibly to ensure that a portion of that money be used to benefit the people of the country," he said.

And the U.S. plaintiffs related to 9/11 will "have their day in court."