It is unclear how much of Sangin district is in Taliban hands, with conflicting reports of how much, and why, territory had been ceded.
The Taliban released a statement celebrating control of the whole district while the country's Ministry of Defense denied the government had ceded any territory.
Shamsullah Sahrahi, a resident of the district, said that the problems that Sangin's population face have been present since the exit of US troops.
"Most of the (district's) residents are living in poverty," he told CNN. "People cannot feed their families properly, the price of commodities has increased and the number of causalities from the recent fights are too high. People have lost their homes.
"The central government does not operate properly in our district, they do not have a proper strategy to recapture the areas which have fallen to the Taliban."
He said that the number of Taliban based in Sangin was not too high, but they relied on support from militants from other districts.
The town is in the heartland of Taliban territory and a key opium poppy-producing region, and a major route for the Taliban opium trade. As spring begins, poppy production in the province is once again rising.
It was defended by coalition troops at great human cost -- during coalition military control of the country scores were killed holding it, including around 100 British soldiers prior to the US assuming control of its defense. Hundreds of Afghan soldiers have died in recent fighting there.
CNN security analyst Rick Francona says the retreat -- or redeployment -- from the key town is an indication that the war in Afghanistan is getting worse.
"The Afghan army is in terrible shape. Anyone looking at this impartially is saying this is not working," he said. "The Taliban have popular support, the government in Kabul don't. The further away from Kabul you get the worse it becomes."
'Left on their terms'
The Resolute Support statement called the move a strategic maneuver that had been planned for "some time." It added that the existing security forces HQ buildings had been extensively damaged through engagements with the Taliban, prompting the move.
The statement said US forces assisted with the move and helped to destroy buildings and vehicles at the former headquarters.
"The (Afghan National Defense and Security Forces) defended the district center for two months and left on their terms," it says. "The only thing they left to the Taliban is rubble and dirt."
A Helmand provincial spokesman, Omar Zwak, told CNN that the move was made to prevent civilian casualties.
He said Friday that Afghan security forces have taken the necessary preparations to recapture the area from the Taliban and that operation would begin Friday.
Taliban claim victory
The Taliban claimed it had assumed control over the entire district.
"After a month of battle, (the Taliban) captured the entire district including Sangin district center, police headquarter and other key outposts," Taliban spokesman, Qari Yousof Ahmadi, said in a statement.
The Afghan Ministry of Defense denied that any territory had been lost, calling the Taliban claims "baseless" and the "propaganda of enemies."
"The district is not facing any security problem our routine operations are going on in the district to eliminate the enemies," a statement said.
The US believes the Taliban have stepped up fighting across Helmand as the poppy harvest season approaches -- the trade in heroin is a major currency earner for the group.
The current estimate by the US is there are 30,000 Taliban in Afghanistan, although not all are active fighters.
A fertile region that is a key location in Afghanistan's poppy trade, Sangin lies in the south of the country in an area that has traditionally been a Taliban heartland.
Gen. John Nicholson, the commander of US forces in Afghanistan, told reporters
in December last year that the Taliban "receive much of their funding from the narcotics trafficking that occurs out of Helmand," adding that "there's a nexus here between the insurgency and criminal networks that's occurring in Helmand that makes Helmand such a difficult fight."
US Central Command has announced that approximately 300 Marines will deploy to Helmand this spring, returning to the scene of some of the fiercest battles in America's 15-year-long engagement there.
However, Francona thinks the government, with or without US help, will never eradicate the drug trade in the sparsely populated region.
"There's so much money there (from drug producing and smuggling) and it's naive to think that we're going to affect that," he says.
"We're going to have to come to some accommodation (with the opium trade)."