Jurgen Klopp cut a delighted figure at a press conference on Friday morning as he confirmed that Liverpool have agreed a fee for Caicedo.
The player though wants to move to Chelsea and is holding out for a switch to Stamford Bridge, leaving Liverpool waiting.
For the Reds, that does not appear to be an acceptable position and they are now looking at walking away from the deal.
Liverpool desperately need to sign a defensive midfielder following the departure of Fabinho to Saudi Arabia.
They have faced frustration in efforts to sign Romeo Lavia from Southampton.
Lavia is close to a move to Chelsea and the Blues could deal a double blow to Liverpool by signing Caicedo too.
Liverpool’s new director of football Jorg Schmadtke may now have to earn his corn and unearth an alternative to Caicedo and Lavia.
