Therein lies the problem is phrase is used to point to a problem in what has just been said:
A: The store is only 10 miles away; let’s go!
B: Therein lies the problem; my car is broken.
The phrase can also be used by one speaker, alone:
Fat and sugar are most delicious; therein lies the problem!
Therein lies the problem means “the problem is in there—within the contents of the previous statement.”