Crunchy is a slur used to describe Iraqis in a derogatory way. Used by US Marines in the second Iraq war. When the US attacked Iraq, Saddam Hussein allegedly told his troops that the American tanks were made of cardboard. So the Iraqi soldiers would jump out in front of the tanks, they would make a crunching sound.
The word Crunchy is a racial slur that has been used historically to degrade and dehumanize iraqis. The word is still used by some people for this purpose, and it is seen as offensive and hurtful to iraqis. If you are unsure about whether or not it is appropriate to use the word Crunchy, it is best to err on the side of caution and avoid using it in any situation.