I worked at a crypto exchange, yes we used shamir shares. But probably not as sophisticated as you're thinking, there was basically one big "break glass" text document with all the keys. And then a hand-rolled software on each person's laptop to distribute the plain text and run / practice the 3/5 recovery ceremony. So anyone losing their device would be equivalent to someone quitting and require its own ceremony to reissue a key, but I don't think that ever actually happened.

We explored using smart contracts to have logic perform the 3/5 consensus rather than a cryptosystem, but that was never rolled out while I was there. Social recovery wallets in general did not take off, which was a big learning moment for me that very few people actually cared about the technology and what they really wanted was an app with as many gambling features as possible that uploaded their keys to google drive.

A better solution (than Shamir secret sharing) are threshold signatures.

The difference is that with Shamir you have to reconstruct the private key in one place before you can sign. With threshold signatures multiple servers can collaboratively sign without ever reconstructing the private key in a single place.

For chains like Solana, Aptos, SUI that use ed25519 (schnorr signature), there's a pretty clean solution called FROST.

For Bitcoin and Ethereum/EVMs that use ECDSA it's a bit trickier but there's been a lot of research recently, so there are solutions.

Worse when crypto exchange bosses go missing https://archive.is/lPpRz

Large exchanges handle this very simply: If they have the keys, it goes to the inheritor(s) once they get a court order. If they do not, it goes nowhere