French prosecutors announced previous year that they were widening their investigation into corruption in athletics to include the bidding-and-voting processes for the hosting of the 2016 and 2020 Olympics.
According to the Federal Prosecutors' Office, the temporary arrest of Nuzman was necessary because the COB president attempted to hide property.
Suspending the COB is an unprecedented act by the IOC EB. He was an International Olympic Committee executive board member in October 2009 when he got a $300,000 payment linked to Brazil and the Diack family on the day Rio won.
"As a standing rule, the OAG does not communicate on physical persons or companies possibly involved or not involved in the OAG's criminal proceedings", the OAG added in its statement.
"Therefore, the IOC will accept a Brazilian Olympic Team in the Olympic Winter Games Pyeongchang 2018", it said in a statement.
Earlier this year former Rio State Governor Sergio Cabral was jailed for 14 years after participating in the embezzlement of $64m (£49m) from construction contracts, including the renovation of Rio's Maracana stadium, where the 2016 opening and closing ceremonies were held.
The Brazilian Olympic Committee, which Nuzman leads as president, has also been provisionally suspended and had its funding frozen. He also accused the former volleyball player of failing to declare assets until after the so-called Unfair Play investigation began. Determining Nuzman's International Olympic Committee fate will be the first landmark test for new chair Ban Ki Moon.
And as Nuzman is the president of the Brazilian Olympic committee too, that body has also been suspended, meaning any payments from the IOC are frozen and it can not vote on Olympic-related matters.
His lawyer, Nelio Machado, told news portal G1 that being detained like this was "harsh and unusual".
They believe Nuzman was an intermediary in a payment in 2009 to Lamine Diack, who was president of the International Association of Athletics Federations (IAAF) during the selection process.
Both Diack and his son have denied the allegations. On Thursday, prosecutors said they have since uncovered emails showing the younger Diack asked for more money and received it.
Marcelo Bretas, the federal judge who authorised the arrests, said on Thursday that new evidence indicated that Nuzman's role in the alleged vote-buying scheme was "more relevant" than previously thought.