Almost all kydex sheaths will loosen somewhat with time.
Here's what I'd do to fix it:
Sheath the knife and hold it by the handle in your right hand (if right-handed).
With your left thumb and index finger - pinch the sheath near the mouth, but at the bottom (usual culprit for loose sheaths) and try to draw the knife. (please make sure this is a safe action first)
If the "fit" improves any, that's where you need to do the re-fit. If not, keep "pinching" in different places until you find the spot(s) that need fixing.
The best solution would be a rivet. If that's not an option, then heat up the area with a blow-dryer on "high" until the kydex turns soft, and then clamp it together.
You might need to do this a few times to get it just right.
Be careful to only heat up the area you want to change. Kydex "forgets" its shape quickly. So, if you heat up too much, you might ruin the fit for the rest of the knife.