Well, that sheath is styled kind of as a "generic" sheath, meaning it doesn't seem to match the knife anywhere except the mouth. Probably the quickest fix, and considering the shape of the sheath, the only fix would be to tighten up the mouth a little. This can be done by going to the point in the upper left corner of the mouth and just inside the outer stitching punch a number 7 hole and insert a Chicago screw, The screw can be tightened or loosened to the correct tension and then set with lock tite or a dab of Elmer's white glue. Because of the shape of the sheath, there will always be some play around the lower end of the blade. This can only be cured by a secondary stitch line following the blade shape, but without a welt it would probably end up being an exercise in futility and cut stitches.
Paul