If they pick moderators, those moderators are no longer volunteers, but employees & agents of Reddit, Inc. — and because of legal precedents with how moderators were engaged with AOL & LiveJournal, anything those technically-employee-agents of Reddit, Inc do wrong with respect to criminal activity and torts, Reddit Inc is on the hook for.

That’s why they use the volunteer mod model, and why they keep us at arm’s-length, and mandate that we cannot receive any compensation of any kind from anyone for moderating.

That said —

The mod code of conduct gives them avenues for removing mods that violate it; there’s also neutral admin-developed tools that identify users who are already active in helping the community out as potential moderator recruits.

So mods that close subreddits maliciously — with an intent to damage Reddit or to demand that they disburse money to a third party — could be removed from mod privileges, and replacements found.