The BM sheath, made by Uncle Mikes I believe fits it like a glove. Go another route if you can find one though. One of the straps started ripping after 3 days of its use carrying that heavy tool.....jeff
I carry mine in a pouch sold with Timberline on it. It works well and has a velcro flap and a really strong 9so far) belt loop set-up. Good ones are hard to come by and so we sell them for $6. I didn't post this to get a sale, just to help you out. There isn't a lot of money to be made on these things, but they sure do come in handy.
You can order # TMSHTH for $6 and we mail them for $3
At my local knife shop and at a local surplus store there is a sheath sold in several sizes that would work for you. It's made by a company named "RAINE". This is a very heavy duty cordura affair that has served me well in several applications. As a matter of fact, I'm getting another for the Swisstool that I'm ordering.
For a minimalist sheath try the velcro opening mag carrier made by Desantis Gunhide. They are very common in gun/ law enforcement shops. I use them exclusively for all my folding tools or large folding knives. A bargain at only about $12.
I carry my SwissTool in a horizontal black ballistic/Cordura nylon pouch which came with my Crawford KFF. It has a velcro closure and fits perfectly. I took the name tag off so that it is all black now. Pat Crawford may be able to sell you one without his name tag on it.
My Benchmade pouch seems to be holding up very well after several months of daily carry. You must have gotten a dud. Also, I think Benchmade is making the pouches (or someone is making them) differently than before.