The Spectral Mud Crab is found on an island east of the main island. When arriving in Paradise, walk down to the water shore, turn right and follow the shoreline all the way until one can see a large island. Swim out to the other side of the island, to the Ayleid Ruin and walk up the stone steps to get to the top where the Spectral Mud Crab is guarding a chest with leveled loot.