Spray cellulose is fine above grade. Below grade, no, unless it is on the interior side of sufficient extruded polystyrene (XPS) or closed cell spray foam. Cellulose insulation is water sensitive and in the basement wall it will be subject to vapour drive out during the winter, in during the summer. (Assuming a temperate or colder climate.) Great for mould. Not so good for humans.

I'd remove it and start over.

Here is a link that might be useful: RR 0202

You do not need a vapor retarder with cellulose insulation, and the concerns expressed by worthy are greatly exaggerated.

The cellulose will be fine as is.

The internet is rife with self-proclaimed building experts still disseminating outdated information. But the building science is clear. No vapour barrier in the basement. Equally, no water sensitive insulation either, unless it is inward of XPS, EPS, closed cell spray polyurethane, polyiso or equivalent materials. (The one exception is if you can find MemBrain vapour barrier in your area.)

If the finishing were on already, I'd let it go. As long as you have no liquid water leaks and maintain a low relative humidity, you may indeed be fine. But since the drywall is not on, it's a relatively simple thing to remove the cellulose and do it right.

Here's where that "funny smell" in the basement comes from.
Vapour barrier prevents inward drying of water vapour. Mould grows
in the water sensitive insulation.

The internet is rife with self proclaimed experts disseminating outdated or misquided info.

Worthy is a classic case of one.

Cellulose is fine for basement applications when the basement has been damproofed as indicated.

No vapor barrier required.

Cellulose will be just fine.