Please comment if this solution works for you or does not. I'd like to zero in on the solution if this is not a good fix for everyone. I am not affiliated with razer in any way.
According to the inbox instructions you are supposed to turn up your system audio to max, and use the audio control on the headset to adjust from there. However, this is bad advice!
Instead, turn up the audio on the headset to max, and then use your system audio controls to adjust the volume. This has solved the issue for me, regardless of whether I am using synapse 3 or the THX software.
I will note that in some special cases I still notice minor clipping but it is very subtle, especially when compared to what I was experiencing before.
Read on for a general explanation as to why this works.
The problem we are having is known as audio clipping, not crackling or distortion. This is an important distinction because the technical term of clipping also describes this exact problem.
"Clipping is a form of waveform distortion that occurs when an amplifier is overdriven and attempts to deliver an output voltage or current beyond its maximum capability. Driving an amplifier into clipping may cause it to output power in excess of its power rating.
In the frequency domain, clipping produces strong harmonics in the high-frequency range (as the clipped waveform comes closer to a squarewave [sic]). The extra high-frequency weighting of the signal could make tweeter damage more likely than if the signal was not clipped.
In general, the distortion associated with clipping is unwanted, and is visible on an oscilloscope even if it is inaudible." -Wikipedia
As you can see from this brief description of clipping, it involves high frequency audio waves, E.G. guitars, high pitch screams, high pitch vocals, really anything that is on the high end of the EQ (as I understand it). It also involves signals that are beyond the capabilities of the amplifier or gear/equipment. Therefore, turning up your PC's audio output to max is, in essence, causing the headphones to receive a signal that results in the software having to "clip" the top of the wave to avoid damage to the hardware. Though the hardware may be able to actually handle these outputs I suspect that the software interprets it as a signal that they cannot. So by turning down the output source you prevent the PC from sending a signal that leads to clipping.
"When an amplifier is pushed to create a signal with more power than its power supply can produce, it will amplify the signal only up to its maximum capacity, at which point the signal can be amplified no further. As the signal simply "cuts" or "clips" at the maximum capacity of the amplifier, the signal is said to be "clipping". The extra signal which is beyond the capability of the amplifier is simply cut off, resulting in a sine wave becoming a distorted square-wave-type waveform.
Amplifiers have voltage, current and thermal limits. Clipping may occur due to limitations in the power supply or the output stage. Some amplifiers are able to deliver peak power without clipping for short durations before energy stored in the power supply is depleted or the amplifier begins to overheat." - Wikipedia
So, as we can see, roughly, it makes some amount of sense that the fix I have proposed would work, at least to some extent. I am an amature audiophile so I only barely understand this stuff. The reasoning behind this may actually be different if we asked a true expert like my uncle. However, as he is too busy to ask such questions to I have provided my interpretation of this information, though it could be totally off. If any audiophile pros want to correct my reasoning or provide more details that would be awesome.
Please feel free to post any comments or questions.
Hope this helps some folks out there. - Death